The shares of this media company slumped 8 percent in Thursday’s trading session after it announced a merger with TV18 and e-Eighteen.com Limited. The shares have delivered more than 30 percent returns to its shareholders on a YTD basis.
With a market capitalisation of Rs. 9,518 crores, the shares of Network18 Media & Investments Ltd started Thursday’s trading session on a flatter note at Rs. 98.40 compared to its previous close of Rs. 98.45. The shares hit a low of Rs. 88.30, making a loss of around 8 percent and are currently trading at Rs. 90.90 apiece.
Such a negative movement was observed after the company announced a scheme of arrangement in which TV18 and e-Eighteen.com Limited (E18, which owns and operates the website and app of moneycontrol ) will merge with Network18.
According to the exchange filing published by the company, the proposed Scheme will consolidate the TV and Digital news businesses of the Network18 group in one company, and help to create India’s largest platform-agnostic news media powerhouse with the widest footprint across languages, straddling both TV and Digital. It will enable Network18 to consolidate and will help to grow its business from a position of strength.
The merged entity will consist of the TV portfolio of TV18 (20 news channels in 16 languages and CNBCTV18.com), and Digital assets of Network18 (News18.com platform which has a presence across 13 languages and Firstpost) as well as the moneycontrol website and app. In addition, Viacom18 with its portfolio of JioCinema and 40 TV channels will be a direct subsidiary of Network18. And Network18 will continue to hold its investment in BookMyShow.
Furthermore, the company announced the share exchange ratio. According to the agreement, those who hold 172 shares of TV18 Broadcast Ltd will get 100 shares of Network18 Media & Investments Ltd. Similarly, for every one share of e-Eighteen.com Limited, shareholders will be entitled to 19 shares of Network18 Media & Investments Ltd.
Coming onto the financial statements of the company, the revenue decreased by 42 percent from Rs. 3,239 crores in the June quarter to Rs. 1,866 crores in the September quarter. During the same timeframe, the net profits showed a transition from a profit of Rs. 29 crores to a loss of Rs. 111 crores.
This merger will bring all mediums of media by Network18 under one umbrella and will provide respite to Network18 traditional media assets as it can be bundled with digital offerings. After the merger, Network18 will be able to cross-sell sell strengths of all media assets and target better advertising revenue with scale over the medium to long term.
The merger can also add an advantage to Network 18 as they can improve and manage all operations, employees and all other expenses. Moreover, Network18 will also have a big advantage in the last mile with Jio having a subscriber base of more than 450 million smartphone users. With this merger, Network18 will be able to cross-sell sell strengths of all media assets and target better advertising revenue with scale over the medium to long term.
Network 18 Media & Investments Ltd is the second-largest digital media publisher in India with leading media properties. The company is engaged in activities spanning across the Digital Content, Print and Allied Businesses.
Written by Vaibhav V Patil
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