Adani Taking Hostile Over Take Of NDTV, Why Indian billionaires are trying to Control Media? Hostile over Taking in Past?

A financial battle between Asia’s richest man and India’s influential TV news network has raised concerns about the demise of independent media in the world’s largest democracy.

Gautam Adani, the fourth-richest person in the world and India’s most prominent infrastructure tycoon, announced the purchase of nearly 30% of New Delhi Television this week (NDTV). He also suggested purchasing an additional 26% of the news network’s publicly traded stock. The acquisition was carried out “hostilely,” according to NDTV, and without the founders’ knowledge or consent.

What exactly is a “hostile takeover”?

When a company or individual attempts to acquire another company against the wishes of the target company’s board or management, this is referred to as a hostile takeover. The “hostile” component of a hostile takeover is the act of collaborating with or acquiring a company without the consent of the board of directors.

How does a hostile takeover take place?

Assume company “A” makes a bid to buy company “B.” Company “B” also rejects the offer, claiming that it is not in the best interests of the shareholders.

An acquiring company persuades current shareholders to vote against the target company’s management during a proxy vote in order to take over more successfully. During the conflict between Adani Group and NDTV, the former purchased a significant portion of the channel’s stock.

Instances of hostile takeover in India

Hostile takeovers have occurred on numerous occasions in the history of Indian corporations. Only two of these attempts, however, were successful in shifting ownership.

India Cements successfully acquired Raasi Cements.

One of the most well-known examples of a hostile takeover in the Indian business world occurred in 1998 when BV Raju sold India Cements his 32% stake in Raasi Cements. As a result, the hostile bidder acquired the tragedy.

Acquiring Mindtree and L&T

This was the second successful takeover after India Cement’s acquisition of Raasi Cement. After gaining control of the Bengaluru-based firm, L&T increased its stake in Mindtree Ltd to 60% in 2019. Large investors rushed to liquidate their holdings, and L&T was successful in acquiring the 31% additional Mindtree stake it sought through an open offer for 4,988.82 crores.

L&T has complete control over Mindtree’s board and management due to its 60% ownership of the software company.

L&T’s year-long attempt to acquire Mindtree through a hostile bid culminated with the purchase of additional shares through an open offer after acquiring a 20.4% stake from coffee tycoon VG Siddhartha and related companies.

How can a company like NDTV avoid a hostile takeover?

If the target company’s board believes it will be unable to thwart a hostile takeover, it can look for a more friendly company to purchase a controlling stake in the company before the hostile bidder does. For example, when stockbroker Radhakishen Damani made an open offer for BAT-controlled VST Industries in 2001, ITC stepped in as a white knight with BAT’s support.

In 2000, the real estate company GESCO hired Mahindra and Mahindra to prevent a hostile takeover by the Dalmia Group.

Greenmail: A tactic in which the acquirer is paid more to buy back the target company’s stock.

Crown Jewels: The target company reduces its appeal to the buyer by selling off its most valuable asset, which may have initially attracted the acquirer. The target company and a white knight may employ this strategy.

The target company uses this strategy to dilute its shares to the point where the acquirer cannot gain control without paying a high price.

It’s critical to understand that Adani is close to Prime Minister Narendra Modi.

According to media observers, NDTV is one of the few remaining independent media organizations in a country where the majority of media ownership is controlled by a small group of powerful and politically connected individuals. Media censorship has worsened under Modi’s Hindu nationalist government. NDTV has previously faced brief bans and accusations of anti-national bias for publishing anti-administration news. Detractors argue that Adani’s $139.9 billion net worth, which is seen as directly aligned with Modi’s policy goals, may have an impact on NDTV’s journalism.

On Thursday, NDTV attempted to thwart Adani’s plans to acquire a majority stake in the company. However, Adani Enterprises stated on Friday that the restrictions imposed by NDTV would not impede their efforts.

India has one of the world’s largest media industries, with over 17,000 newspapers, 100,000 magazines, and 178 TV news channels. On the other hand, the journalism environment there can teach totalitarian societies a valuable lesson. India is ranked 150th in the world for press freedom out of 180 countries. Authorities allegedly attacked 108 journalists for critical reporting on 13 media outlets last year, killing six of them.

“There has always been some level of bias across TV channels for years,” Manisha Pande, executive editor of media satire website Newslaundry, claims, “but we’ve seen a stark rise in hyperpartisanship in news coverage and discussions since 2014.”

Human rights reports show that since Modi became Prime Minister in 2014, there has been a ruthless crackdown on government-critical reporting. Many also promoted a positive interpretation of recent events or fueled prejudice against the country’s minorities.

According to Indian television news analyst Pande, NDTV stood out in this highly polarising environment. “Many news channels would show how great those speeches were if we were covering Modi’s speech,” she explained. The exception would be NDTV, which would investigate it. She added that if Adani gains control, all of this could change.

Last year, Adani sued the author and journalist Paranjoy Guha Thakurta for defamation for his critical reporting, claiming that Modi’s administration changed the regulations governing power projects in special economic zones to benefit Adani. Thakurta is still not allowed to make public statements.

According to a Reporters Without Borders study on media ownership, those with political ties control the majority of the country’s top news organizations.

Similar concerns were raised after another billionaire with close ties to Modi, Indian billionaire Mukesh Ambani, purchased Reliance in 2014 and acquired a significant media company.

According to experts, Adani’s acquisition of NDTV highlights the financial vulnerabilities of the news industry. Because the news industry is not profitable, big media has relied on corporate or political funding to stay afloat for decades. Millions of dollars are spent by the Indian government on advertisements for television shows, newspapers, and websites such as NDTV.

The purchase exposed NDTV’s financial issues, which date back to 2009 when the company took out a large loan from a private lender for more than $50 million. The private lender was free to convert the warrants into equity stakes and transfer them to whomever they wanted, according to the terms of the agreement. Reliance, which is owned by Ambani, is said to have funded the loan. For more than 1 year, rumors of an Adani takeover have circulated.

AMG Media Networks, an Adani media division launched this year, hired veteran journalist Sanjay Pugalia as CEO and editor-in-chief. Pugalia regarded the purchase of NDTV as a “significant milestone.”

In his statement, he stated, “[AMG Media Networks] seeks to provide information and knowledge to Indian citizens, consumers, and those interested in India.” We expect to strengthen NDTV’s position as the sector’s leading news provider.

Deepak Shenoy, the founder of investment research firm Capitalmind and an industry authority, argued that the current takeover was unavoidable and that referring to it as a “hostile takeover” would be ignoring NDTV’s mistakes. He went on to say that the acquisition should serve as a wake-up call to media companies that take on debt they can’t afford to repay.

He claimed that “there is a lesson to be learned from the excessive leverage of media barons” and that “big corporations will be aggressive in their pursuit of strategic gains.” “If you use leverage, you are responsible for the outcomes.”

edited and proofread by nikita sharma