Adani move sizzles media stocks. Is it Zee or NDTV on the radar?

by 5paisa Research Team Last Updated: Dec 13, 2022 - 05:55 am 52.7k Views
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The Adani Group has hired a new chief for its entry into the media sector, pushing media stocks higher to hit circuit breakers on Monday and fuelling speculation of an acquisition move by the Gujarat-based conglomerate.

The billionaire Gautam Adani-led group named journalist Sanjay Pugalia, until recently the president at Quint Digital Media, as the CEO and editor-in-chief of its media vertical during the weekend.

The group said Pugalia will lead its media initiatives and support the corporate communication team. He will report to group scion Pranav Adani and will work closely with Sudipta Bhattacharya, CTO of the group and CEO of its US operations. 

Pugalia comes with experience working in digital, television and print. Prior to Quint, he led the CNBC-Awaaz Hindi television channel that’s part of the TV18 group controlled by billionaire Mukesh Ambani, India’s richest man.

The Adani Group has been diversifying aggressively in the last five-seven years partly via an inorganic growth strategy. A senior appointment in a sector it has not been involved directly fuelled rumours that it is looking at some of the existing media houses as an entry point.

Zee or NDTV?

Two news media organisations saw their stock prices hit circuit breakers on Monday. New Delhi Television Ltd (NDTV) and Zee Media Corporation were the counters that saw their shares hitting the upper circuit.
Zee Media is the news business arm of the Essel Group, which is known for a string of TV channels including its flagship Zee Entertainment Enterprises Ltd.

NDTV’s share price rocketed nearly 10% to Rs 79.65 a share, valuing the company at Rs 513 crore. Zee Media’s share price rose about 5% to Rs 11.78 apiece, giving it a market capitalisation of Rs 737 crore.

NDTV had in the past faced heat over alleged tax evasion that the company denied. Zee’s parent Essel has been facing a financial crunch. Essel’s flagship firm Zee Entertainment, which houses its entertainment channels, has been facing shareholder activism over strategy and corporate governance.

The Essel group’s debt woes have meant it has been losing a grip on the listed companies. The promoter stake in Zee Media itself has shrunk from over 55% to under 15% in the last two years. This makes it a prime target given its brand recall and need for cash infusion to sustain its operations.

NDTV, which is still majority owned by its founders Prannoy and Radhika Roy, has been in the rumour mills for being a takeover target for several years now.

Ambani vs Adani in the making?

The impending move to enter the media business could also pitch Gautam Adani against Mukesh Ambani, who controls Network18 and TV18 with news channels like ETV and CNBC-TV18 among several others. 

Mukesh Ambani-led Reliance Industries had acquired control of Network18 after converting into equity the debt instruments it used to back its erstwhile promoter Raghav Bahl.

Bahl, who now runs Quint Digital, has a partnership with Bloomberg for its digital publication but has been unsuccessful in securing government approval to enter the TV news business.

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