Battle for UNI enters the final lap

MEDIA: Fate of Essel Group's bid to be decided shortly.

Will Subhash Chandra become the majority shareholder of the Indian wire service UNI (United News of India)?

The answer will be known in the next few days when the Company Law Board gives its order on the Zee-UNI share purchase case, filed against Zee by a clutch of media companies including ABP Ltd. Their contention was that UNI's share transfer to Zee was unlawful.

A separate court case was also filed by Bhopal-based newspaper publisher Sandhya Prakash Ltd. The company claims that its revised bid of Rs 40 crore for UNI shares was not considered.

However, in the first bid Zee, through its investment vehicle Mediavest, had bid the highest amount at Rs 32 crore followed by Gujarat Samachar at Rs 28 crore and Sandhya Prakash at Rs 25 crore.

Needless to say, though the Essel Group chairman Subhash Chandra bought a 51 per cent stake in UNI one year ago, he is yet to get management control in the news agency.

Bharat Patel, promoter of Sandhya Prakash did not respond to Business Standard's questionnaire in spite of several reminders and ABP Ltd's CEO DD Purkayastha said he could not comment on the case as it was sub-judice.

Why Chandra may be interested in UNI is not hard to see. In Delhi, the UNI office is located in the heart of central Delhi, on a sprawling over 2,000 sq mt plot.

In fact, the plot is nearly 5,000 sq mt but it also houses the Press Council of India office. Even the other properties that UNI holds in cities such as Mumbai, Bangalore and Hyderabad are attractively located.

"Clearly, Zee will use the prime locations either for its broadcasting business or its newspaper DNA," observes a media expert.

However, Zee sources claim that the land use norms in UNI's case are well-defined. For a start, UNI is a trust and a not-for-profit company. Two, land, especially the one in Delhi, has been given for the special purpose of running UNI. Even the excess space that's not used by UNI is to be let out by the government.

"There are restrictions on construction as well as the office is in Lutyen's Delhi and the Metro Rail is passing by it," says a Zee executive. If it eventually becomes a company, the land will go back to the government and "we will have to acquire it at market rates", he adds.

Even today UNI is adding up a monthly loss of about Rs 40 lakh. The organisation is unionised and there are 600 non-journalists and less than 300 journalists.

A UNI board member says that the news agency went into a financial decline after the wage board salary revision in 2000.

"Salaries grew by 50 per cent and the expenditure went up. But the business declined," he says. UNI paid the arrears to its employees but gradually many of the major dailies "" and shareholders "" stopped subscribing to the service.

"While the Press Trust of India makes it mandatory for its shareholders to subscribe to its news service, there is no such provision in UNI," the board member adds.

While, there may be a question mark over who will eventually win the case "" there's no confusion about the fact that UNI needs a hefty revival package to get around its financial mess. And fast.