Indian broadcaster NDTV fights back against Adani takeover

NDTV is strongly resisting an attempt by India’s richest man to secure a controlling stake in the independent broadcaster — a move that threatens major changes to the country’s media landscape.

Gautam Adani’s new media venture AMG Media Networks announced on Tuesday it had indirectly acquired a 29 per cent stake in the independent news channel and was making an open offer for a further 26 per cent, kicking off a battle for control with NDTV’s founders Radhika and Prannoy Roy.

It could prove to be the biggest shake-up of the industry since last year’s merger of Sony Picture Networks India and Zee Entertainment, and has renewed debate about the influence of business tycoons on journalism.

While NDTV’s English and Hindi channels have long featured critical views of Prime Minister Narendra Modi’s government, Adani, whose conglomerate is India’s third largest by market value, has championed Modi and aligned his businesses with the government’s vision for India.

His move has inflamed concerns around media freedom “because of the current perception that media houses in general may not be independent,” said Debanshu Mukherjee, co-founder of the Vidhi Centre for Legal Policy.

NDTV, which has said it did not consent to Adani’s acquisition of the 29 per cent stake, countered on Thursday by arguing that its founders are blocked from dealing in securities by a regulatory order. The securities regulator’s “approval is, therefore, considered a necessary precursor” for the shares to be transferred to an Adani-owned entity, NDTV said in a stock exchange filing.

The shares being fought over are the result of the Roys’ money troubles back in 2009, when they borrowed Rs3.5bn ($44mn) from a company controlled by Mukesh Ambani’s Reliance Industries in order to refinance existing debts. A person close to Reliance described this as a “bailout”.

The Roys did not have to pay interest on the 10-year loan, but the terms gave the company which owned it, Vishvapradhan Commercial Private Limited (VCPL), a right to 29 per cent of NDTV via warrants that could be converted into equity.

This unusual arrangement raised eyebrows, and a regulatory official in 2018 contended that the loan was a facade “to acquire indirect control of NDTV,” tying VCPL up in legal proceedings. The securities regulator overturned a 2018 court order in July, paving the way for a sale.

On Tuesday evening, the Adani group announced that it had bought VCPL and was exercising the right to turn the warrants into shares. It gave the Roys 48 hours to make the transfer. After that deadline expired on Thursday night, now Adani-owned VCPL dismissed NDTV’s claim that the regulator had to approve the transfer, saying its contentions were “baseless, legally untenable and devoid of merit,” in a filing to stock exchanges.

M&A experts say the Roys’ chances of winning the fight against the deep-pocketed conglomerate are bleak. “If you stall for time and make it long enough maybe the raider loses interest and goes away — but they are clearly dealing with someone who wants the brand and the asset,” said Ravi Kumar, partner at IndusLaw and public markets M&A specialist.