Letters: Money for the media

This refers to “The mystery of missing media mergers” (June 8). The media certainly gives a sense of power/influence to the owners and their associates, which is why they are reluctant to let the businesses go. Financial markets in India have enabled the media to survive and keep raising money through waterfall structures.

Look at the trail of public announcements by the two leading news broadcasters in India in the last five years. They have gone through a series of restucturings/spin-offs. The objective of the same has been to raise money from financial/strategic investors without diluting the promoters’ stake.

The business model hitherto has focussed on media owners incubating properties in promising areas, creating new brands and then bringing investors at higher valuations and de-leveraging. This cycle successfully continued till 2008 (and is still going on for the regional newspaper media).

The cable TV industry already has three listed entities. The problem here is that a lot of regional players are able to survive because of funding from politicians/local bigwigs. Yet there are some other organised players that have received private equity (PE) funding when valuations were hot, but may now be in financial stress. While none of the listed players have performed well since their IPOs, they are nevertheless well-funded.

The template is now being created for consolidation as fresh PE money is not forthcoming.

In DTH again, the distance between the top three players and the rest is increasing day by day. But again, since money is getting tight, the template for consolidation is again getting in place and one cannot ignore it.

Sanjay Jain, on email