Turns out TV-18 has fired 300 people last week and it seems this is across the channels – TV18, Awaaz, CNNIBN and Lokmat. One of the terminated ones said, “We were called to the office and simply handed letters. Almost the entire crew at IBN7 has been asked to leave.” Livemint has a long piece on how the restructuring with Reliance has changed dynamics. The Reliance group runs the show, and it seems they are behind the change. While they don’t have any direct ownership (yet), they have a right to buy out Raghav Behl’s ownership and he’s the promoter of the group.
The TV18 group has largely struggled for profits. But they’ve always done something weird to survive – restructure, merge companies, demerge entities and raise funds. There’s a owning entity (Network18), a subsidiary (TV18) and a ton of other companies, some listed, some unlisted. What saddens me is that the biggies in the management are allowed to continue. The board and upper management of Network18 has effectively given a Rs. 500 cr. loan to a promoter entity (with the misinterpretable name of Network18 Senior Professional Welfare Trust) – first, that entity got the loan from elsewhere, and Network18 pledged its shares in subsidiaries as collateral. Later, Network18 took over and directly loaned the trust Rs. 500 cr. And in 2012-13, the 500 cr. loan was continued .
What did the trust do with the money? Buy Network 18 shares. What are those shares (1.6 crore of them) worth today? At Rs. 29.25 About Rs. 48 cr. That’s a Rs. 450 cr. hole that was not just a horrible business decision, it was also potential manipulation (a company can’t loan a promoter entity money to buy its own shares). And yet, management gets away scot free with the restructuring. All said, I hope those people who have lost jobs find them elsewhere. I hope some get to start their own TV channels and change the way reporting is done. The positive side: If we’re going to get competitive, this is one way to start.