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| NDTV set to demerge its news and entertainment business |
| Shuchi Bansal / New Delhi Mar 24, 2009, 00:46 IST |
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In a complex restructuring exercise, the Prannoy Roy-promoted broadcasting company, New Delhi Television Ltd (NDTV), is ready for a demerger of its news and entertainment business. In a court-convened meeting of its shareholders on March 24, the company plans to move its news broadcasting business to NDTV Studios Ltd, while its entertainment TV business, NDTV Imagine and NDTV Lifestyle, will continue to stay under New Delhi Television Ltd. The entertainment verticals operate under NDTV’s subsidiary, NDTV Networks.
The notice for the shareholders’ meeting explains that the demerged company, NDTV Studios Ltd, which gets an automatic listing, will have three wholly-owned subsidiaries – NDTV News 24X7 Ltd, NDTV India Plus Ltd and NDTV Business Ltd. These companies will operate the English (NDTV 24X7), Hindi (NDTV India) and business news channels (NDTV Profit), respectively.
The company is also moving its proposed news, current affairs and infotainment channel for Chennai from Metronation Chennai Television Private Ltd to NDTV Hindu Media Ltd. The company will launch a local news and infotainment channel in Chennai in a joint venture with the publishers of The Hindu newspaper, as a 49 per cent equity partner. Though NDTV announced its JV with The Hindu last year, the channel is expected to be launched in the next two months.
Explaining the objective of the demerger in the notice to its shareholders, the company said, “The nature of technology, risk and competition involved in each of these businesses is distinct from each other and are, in fact, rapidly divergent. Consequently, each business or undertaking is capable of addressing independent business opportunities, deploying different technologies and attracting different sets of investors, strategic partners, lenders and other stakeholders.” The notice explains that the news and entertainment businesses are being segregated “as each of the businesses has a different set of regulations to comply with, which include restrictions on the extent of foreign investment… According the guidelines of the Ministry of Information and Broadcasting, foreign direct investment in an entity engaged in the news and current affairs TV channels is restricted to 26 per cent whereas foreign direct investment of 100 per cent is permitted in companies engaged in the business of running non-news and current affairs TV channels.”
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