Network18 may soon simplify the holding structure of its companies and remove cross-holdings.
The company's founder and managing director Raghav Bahl said the company now has the headroom to attempt restructuring. "For the first time, we have the luxury of a headroom to attempt it. Any attempt that we do will be to make it simpler, more linear, remove cross-holding and have a very consistent model," said Bahl in a conference call with analysts, after declaring the company's results for 2009-10.
Bahl said, "Today, for instance, we have close to 60 per cent shareholding in TV18. I think we have probably never been more than 53 per cent at any stage. So, this gives us a headroom there. We are close to 58 per cent in IBN18. That is also significant headroom. We are close to 55 per cent at Network18, which again gives us a possibility to see if we can organise our assets in a far less complex, much more shareholder-friendly and far more consistent manner.
Network18 had posted losses of Rs 134 crore in 2009-10 against losses of Rs 181 crore in 2009-10. Analysts point out the decline in losses in 2009-10 was largely helped by an improvement in advertisement revenues and cost-cutting measures. TV18, had in fact posted positive PAT (profits after tax) of Rs 31 crore in the January-March quarter. "The management of TV18 had taken stringent cost-control measures post heavy losses in FY09, and was waiting for the top line growth to return to show profitability," said Mohan Lal, media analyst, Elara Capital.
All the businesses of TV18 — news operations, Web18, Infomedia18 and Newswire18 — had posted losses in the fourth quarter of financial year 2009. A Mumbai-based media analyst, said on condition of anonymity, that TV18's profits were also helped by the the strategic sale of the e-publishing BPO business of Infomedia18 to Cenveo. He said though the businesses of TV18 look good, there needs to be further restructuring in Infomedia18 for profitability.
Responding to a question on the need for restructuring, Bahl said,"There are too many listed companies in the group. At last count there were five, including the Indian Film Company, which is listed on AIM in London. Two, there are cross- holdings between the various companies and it becomes difficult to value for experts. The third thing was that the business model of each company has elements of overlap in it. Any possible re-structuring that we may do would address these three observations, once and for all." He, however, did not give specifics of the restructuring process.
Network18 holds stake in TV18, IBN18 and Infomedia18, which are listed on the Indian bourses. It has brands like Web 18, CNBC TV18, CNBC Awaaz, Newswire18, moneycontrol.com, CNN-IBN, IBN 7, Homeshop18 and E18 under its fold. It also has investments in Setpro, primarily engaged in the business of distribution of channels. It also has a 50:50 joint venture with Viacom and runs the company Viacom18.