Inside the Network18 takeover

How Raghav Bahl lost control of the media company he started two decades ago to Reliance Industries

Raghav Bahl got all of three days to make up his mind, according to people involved in the transaction—three days before a 27 May meeting at which he revealed to the Network18 board that Reliance was taking over. Photo: Mint
Raghav Bahl got all of three days to make up his mind, according to people involved in the transaction—three days before a 27 May meeting at which he revealed to the Network18 board that Reliance was taking over. Photo: Mint

Mumbai: The board meeting of Network18 Media and Investments Ltd in Delhi on 27 May was supposed to be a humdrum affair, as most such meetings are, and was turning out to be one.

All directors except Subhash Bahl were in attendance. Chief financial officer R.D.S Bawa, 61, presented the company’s latest financial numbers, which were quite good compared with its performance in the past.

Revenue for the year to 31 March had increased 12% to Rs.2,692.4 crore from the previous year. The company had swung to an operating profit of Rs.87.2 crore from an operating loss of Rs.39.3 crore in the previous year.

Group chief executive officer B. Saikumar summarized that all divisions of the company—news, entertainment and digital—had posted impressive growth. The digital unit’s loss had narrowed to Rs.80.6 crore from Rs.125.4 crore in the previous year. The news division, especially, had done well, aided by higher advertising and subscription income. All in all, it had been a good year.

It was then that Raghav Bahl, 51, founder and managing director of Network18, dropped the bombshell, according to a person present at the meeting who asked not to be named.

“I am quitting,” Bahl said. “Reliance wants to take over.”

The words hung over the meeting; silence reigned for a while. “Why?” someone asked. “They want to take over,” replied Bahl. “They are completely within their rights to do it. So I have decided to move on. They made an offer that I could continue as a minority shareholder, but I have decided to exit.”

Two days later, Reliance Industries Ltd (RIL) announced that it would spend Rs.4,000 crore to take complete control of Network18, the company Bahl founded in 1993, in the biggest takeover in India’s media industry and followed it up with an open offer to the public.

In early 2012, Mukesh Ambani’s RIL bought debentures in Network18’s promoter group companies, convertible into shares at any time within 10 years, infusing much-needed cash into Network18.

“It was a bit surprising. But businesses get made and sold,” said a board member who was present at the 27 May meeting but did not want to identified because he is not authorized to speak to the media. “Reliance decided to convert only after two-and-a-half years. It was a very clear deal. Nothing bad or illegal about it. Raghav said that relations with Mukesh (Ambani) are all fine. Life goes on.”

Another board member who was part of the meeting, but also did not want to be identified, said that as part of the takeover deal, Reliance offered Bahl “a generous amount”—an annual pay of Rs.20 crore—to carry on as managing director, but that he spurned the offer.

Soon, another discussion ensued. What about the board members? Do they need to go too? Bahl told them that RIL didn’t want that. The board could continue to carry on as if nothing had happened. The members summarily rejected the suggestion. They wanted to step down too.

The meeting lasted for a while. And then a few people went out for a drink.

The exodus

An exodus of Network18 executives ensued.

On 28 May, at about 1.32pm, Saikumar sent out his resignation to Network18 employees. He had spent a good part of the morning writing it on his iPad. “This was always going to be a tough mail to write. And here it is. I’ve decided to move on from Network18,” he said. Mint has a copy of the email. Sai Kumar had spent more than 14 years at the company.

Later that day, Ajay Chacko, chief operating officer (COO) at Network18, started telling his team that he was on his way out too. The news spread. At CNBC TV18’s office in Lower Parel, Mumbai, employees made a beeline to bid farewell.

“Quite a few women broke down,” said a Network18 employee who didn’t want to be identified. As the day came to a close, everybody was expecting the worst.

Their fears came true. On 29 May, resignations started coming in one after another. By now, it was confirmed that Chacko was leaving. Bahl stopped by his office in Noida and met with a few close colleagues to announce his exit.

“He was quite upbeat,” said a Network18 official who met Bahl that day but did not want to be identified. “He said that ‘they just wanted to take over’ and ‘these things happen’, but unlike his entrepreneurial journey the last time, this time he was ‘financially sound’. I asked him if he was going to take a holiday. He said ‘no’ and that he would get on to his next assignment in a week or so.”

Chief financial officer Bawa put in his papers. Ritu Kapur, Bahl’s wife and a director at the company, resigned. Unlike the others, she wasn’t going to stay around to help with the transition, and 29 May was her last day.

In a meeting with colleagues, Kapur broke down. “Everybody on the floor had long faces,” says a CNN-IBN journalist who requested anonymity. “Rohit Khanna, an executive producer at the channel and someone who’s been around from Day 1, broke down. It was very dramatic, as if there had been a personal loss.”

By then, emotions were running high. Smoking breaks were becoming longer and more frequent. Speculation was rife: Is RIL really taking over? When? Are the big faces of the channels also quitting?

At 6.38pm that day, RIL sent out a press statement announcing it was taking complete control of Network18, including its subsidiary TV18 Broadcast Ltd. It didn’t take much time for this to be copied, pasted and forwarded several times over.

“People’s faces fell,” said the CNN-IBN journalist quoted earlier. “In situations like these Rajdeep (Sardesai, editor-in-chief of IBN18 Network) used to come out and say something. This time he didn’t.”

It was late in the day. Cabins of the other big bosses were also empty. Not that it mattered. They wouldn’t have had much to say. None of them had seen it coming.

The trigger

Sometime in early March, Sardesai had got a call from Ambani, who was livid.

“He was like—why is the channel (CNN-IBN and IBN7) venting all kinds of views against him?” said a former Network18 official who is aware of the conversation. He didn’t want to be named.

Throughout the run-up to the November-December state assembly elections and its aftermath, Ambani had been angered by the attacks made on him by Arvind Kejriwal, leader of the Aam Aadmi Party (AAP). The party had captured the public imagination and gone on to form a short-lived government in Delhi.

Kejriwal had gone all guns blazing for Ambani—in press conferences, speeches, at rallies and pleas to the Anti-Corruption Branch. He had made several allegations. To begin with, he had named Ambani in accusations about crony capitalism; he then filed a first information report (FIR) against him, along with RIL and some central government ministers and officials over alleged irregularities in the pricing of natural gas from the Krishna-Godavari basin off India’s east coast.

All of Kejriwal’s allegations were being aired live on national television, fuelling further criticism on social media. RIL, a $66 billion energy firm, wanted to react but didn’t know how. Suing newspapers and television channels was one thing—suing Kejriwal quite another. Threatening him with a lawsuit didn’t work. One-off statements from the communications team summarily denying those allegations weren’t good enough either.

RIL finally reached out to several global communications agencies for help. Sometime in late February, the leadership team of New Century, a London-based media agency, flew down to India and had a crisis meeting with the top brass at RIL, according to a former Network18 official who asked not to be named.

In the past, New Century had advised several leading political parties, wealthy individuals and CEOs of multinational corporations such as BP Plc, British Airways, Prada SpA and the Arsenal football club. Mint couldn’t independently verify if the agency had finally received a mandate from RIL.

At this juncture, a call to Sardesai seemed like a good idea. After all, RIL indirectly owned Network18. “They wanted a complete blackout of Kejriwal and AAP,” said another Network18 official who was privy to the conversation but did not want to be identified. “Rajdeep refused, saying it was just not possible. He stood by the spirit of journalism. So they were miffed that the channel had not boycotted the AAP.”

Pressure was mounting on Bahl, too. According to an RIL official who is now part of the takeover team at Network18 but refused to be identified, Manoj Modi, the right-hand man of Mukesh Ambani, reached out to Bahl.

“Modi was furious. He was like—‘tum humko dacoit bulate ho, tum chilla rahe ho ki hum crony capitalist hai. Agar aisa tha to dacoit se paise mangne kyon aye the? Tum kaun se doodh ke dhule ho?’ (You are calling us a dacoit, you are shouting that we are crony capitalists. If that is so, then why did you come to us for money in the first place? Do you think you have a clean record?),” says the official.

Defining control

A man who’s championed the cause of “fair, plural and unbiased journalism” in the past (Bahl’s letter to Network18 employees dated 2 December 2013—Mint has a copy of the email), Bahl did not reply to a set of questions seeking his perspective on the events that unfolded at Network18.

An acknowledgement was received from Kshipra Jatana, Network18’s group general counsel who has since quit the company but is around for the transition. “Please note that all the points and events mentioned in your mail are incorrect and are fictitious. We would urge that you refrain from publishing any such news item, failing which Network18 may be forced to resort to legal action,” she said.

An email sent to RIL on 9 June, with a detailed questionnaire, did not elicit any reply.

It was a peculiar situation. Financially speaking, RIL had indirect control over the Network18 group, but in effect it had no control.

“How do you define control?” asked the CEO of a media company who has followed this transaction closely but did not want to be quoted by name. “Control is when you can run the show the way you want it. Indirect control means nothing.”

A Reliance Jio Infocomm Ltd official who did not want to be identified said RIL has a different concept of ownership. “They want to control everything. Raghav didn’t see it coming. He was too naïve to believe that he could run the company for the next 10 years.”

It is not like the thought had never crossed his mind. A banker with ICICI Bank Ltd, which has been a regular lender to Network 18 for more than a decade, said Bahl had always had this on his mind and he had been keen to repay RIL and get Ambani off his back.

“He was like—now that my debt has been taken care of, I will work hard, the business will start generating accruals and soon I will repay,” said the banker, who didn’t want to be named.

What foxed Bahl was the timing and the speed with which RIL acted.

Bahl got all of three days to make up his mind, according to people involved in the transaction—three days before the 27 May board meeting.

Making sense

For RIL, buying the Network18 group in May made absolute business sense. Here’s why.

One, in order to get a grip over the whole gas pricing affair. “Reliance wants to ensure that nothing goes against them in the gas pricing issue,” said a Network18 official quoted earlier. Complete control over one of the largest media companies in the country, with a presence across television, print and digital, helps to put across one’s point of view.

Two, the synergy between Network18 and Reliance’s 4G play in the telecom business through Reliance Jio Infocomm is for real. “They need a content factory of enormous scale,” said the Reliance Jio official quoted earlier.

To put it simply, with 100% control, RIL now has access to all the content put out by the Network18 Group. This includes,,,, Cricketnext, Homeshop18, and TV channels such as Colors, CNBC TV18, CNN-IBN, IBN7 and CNBC Awaaz.

Three, Network18 was available at a pretty cheap valuation. The company’s losses had shrunk quite a bit. For 2013-14, the company narrowed its loss to Rs.36.8 crore from Rs.105.5 crore in the previous year. The work of trimming the unwieldy group by selling off businesses that weren’t performing and sacking employees had already been done by Bahl.

“Look at the portfolio and size of that group. It is still making losses but it is substantially undervalued and is on the verge of a turnaround,” said another RIL official, who had direct knowledge of the transaction but did not want to be identified.

It is another matter altogether that when RIL approached Bahl for the takeover, it didn’t have to bend over backwards. RIL executives told Bahl they wanted to take over and run the company themselves. Bahl didn’t have a choice—to rationalize or refuse.

He could have. If he had chosen differently. Two-and-a-half years back.

The eternal optimist

A journalist who started out with Rs.50,000 pulled from life savings in fixed deposits in 1993, Bahl built Network18 into one of India’s largest media empires by size from a tiny production company.

People who have worked with Bahl in the past said that while he had a knack for spotting opportunities, Bahl wasn’t always hungry for supernormal growth.

“Back in the day when he had the tie-up with CNBC and, he was pretty satisfied,” a former Network18 official who spent more than a decade working closely with Bahl said, requesting anonymity. “But then he spotted the opportunity in general news. Back then, NDTV was a monopoly. The coup moment for him was when he was able to get Rajdeep Sardesai and Sameer Manchanda on board. And when CNN-IBN started with a bang, Bahl believed that anything he would touch could turn into gold.”

Manchanda and Bahl parted ways in October 2010 after working together for nearly five years.

That belief in his Midas touch led Bahl to enter several businesses—general entertainment channels, movie production, setting up multiplexes, selling mobile phones, online and in brick-and-mortar stores, e-commerce, selling movie tickets, buying a printing press, investing in a whole host of trade and consumer-led print magazines, a website which put out reviews of restaurants, setting up a phone service from where you could get any number you wanted which came along with a call centre, a website for putting out news on commodities, another to put out breaking news of the stock markets, a sports management firm that mostly organized cycle races, an event management firm.

And all of this still does not cover the number of ventures that Bahl dabbled in or those that he wanted to enter but never did.

In December 2006, Ambit Corporate Finance, Web18, the division which housed Network 18’s web properties, and Centurion Bank of Punjab signed an agreement to venture into the stockbroking business, but it never materialized. Then again in 2007, Bahl was seriously toying with the idea of tying up with UK-based Financial Times and starting a newspaper.

The ICICI banker quoted above described Bahl’s then frame of mind thus: “He got carried away. But you have to understand that he didn’t have any option.” The period 2005-2008 were days of heady corporate growth in India.

But a first-generation entrepreneur like Bahl had only so much equity to fund his expansion. So what did he do? “He borrowed because every business needed capital,” said the banker. “From banks. By setting up companies in Mauritius and the Cayman Islands and borrowing on their books and borrowing in his own name, in his own holding companies.”

The problem was that whatever Bahl was borrowing for was not generating enough cash. Bahl paid Rs.4.25 crore for Burrp!, a website that puts out reviews and ratings of restaurants. He paid another Rs.2.1 crore for buying out the Ask Me brand name.

Within a year of TV18’s acquisition of Infomedia India Ltd from ICICI Ventures in December 2007, the company was making losses and had a negative networth.

Stargaze Entertainment Pvt. Ltd, the multiplex business, made a loss of Rs.3.2 crore in 2008-09. By that financial year, Web18 Software Services had built up an accumulated loss of Rs.92.3 crore—in just three years of operations. Similarly, Newswire18 had an accumulated loss of Rs.34.6 crore. In 2008-09, Homeshop18 made a loss of Rs.49.3 crore.


Simply put, the group had become an unwieldy cash-guzzler. When the tide went out and a long financial downturn ensued, quite a few entrepreneurs in corporate India, and not just Bahl, were caught swimming naked.

In late 2011, Bahl had his back to the wall. With consolidated debt of almost Rs.1,400 crore on its books in the quarter ended 30 September 2011, Network18 had widened its consolidated net loss to Rs.70.26 crore from Rs.64 crore in the previous quarter. In the 12 months preceding that, the company’s shares had slid almost 70%. The company’s cash cow, its news television business, was under pressure. The economic downturn resulted in advertising revenue drying up.

Most of the businesses were in need of capital investment but Bahl didn’t have any money. Interest costs were already too high and with the company’s net worth almost eroded, banks weren’t willing to lend any more.

Bahl was clear he needed help. From someone with deep pockets. From someone whom he could respect, and who, in turn, would respect him. The one man he reached out to was Mukesh Ambani.

India’s richest man, who in the past had rescued several other entrepreneurs in need of help, was not averse to Bahl’s idea. Haresh Chawla, Network18’s CEO at the time, was, according to three Network18 officials, none of whom wanted to be named.

Chawla reasoned with Bahl that a better idea would be to raise money by divesting a stake in the entertainment business to Viacom18 Media Pvt. Ltd. Bahl wasn’t convinced because the market was depressed and the valuation was low. Chawla persisted. And then quit.

In his exit email to Network18 employees dated 14 November 2011, Chawla joked: “PS: I just read a report this morning, most imaginatively linking my move to a “debt issue” at Network18. How “inventive” our media is becoming!!?? As Raghav and I have explained in our interactions, the company is well on its way to resolve its high level of debt and it shall be mitigated very shortly...and the more relevant fact is that N18 has never delayed/faulted on even a single financial commitment.” Mint has a copy of this email.

Enter RIL

The debt issue was indeed taken care of. In January 2012, RIL made an investment in Network18’s promoter group companies through a newly created vehicle called Independent Media Trust. The promoters, led by Bahl, used funds received from the trust to infuse cash into Network18 and TV18 Broadcast, apart from buying RIL’s stake in the ETV channels.

Bahl was ecstatic. In an email sent to Network18 employees on 3 January 2012, he said, “I wanted to wish you as proud team-mates of India’s largest media company (we have achieved this in the 18th year of our existence!!). Yes, with our proposed acquisition of the ETV channels, we have become just that—across genres; across geographies; across audiences; across TV, Internet & Allied Media. Only one milestone remains to be crossed now— to become the largest by revenue and profits.” Mint has a copy of the email.

To a great extent, Bahl was also relieved. A Network18 editor who met him at the time but refused to be identified, said, “It gave him huge relief. It was always playing on his mind, how do you save the whole thing? He didn’t have too many options. Network18 was a huge operation and it is not like he needed Rs.100 or Rs.500 crore. He needed much more than that. And few people have that kind of money. So he went to the guy who had Rs.80,000 crore of cash to spare.”

Did RIL’s entry change anything on the editorial side? “See, any way you are expected to be sensitive when writing on Reliance. So it was usual that when you are dealing with the company, you stick to official releases,” added the editor.

Almost a year after RIL’s investment, on 1 January 2013, Bahl acknowledged in an email to Network18 employees that he had perhaps gone overboard in his pursuit of growth. “…as we invested over half-a-billion dollars and battled to build our businesses through years of global economic strife, we faltered…we over-borrowed during a phase of negative cash flows, and got debt-trapped. But now, as 2013 dawns, we have licked these problems too—we are a zero debt group, generating free cash flows. No power on Earth can now stop us from becoming a Great and Valuable Company.” Mint has a copy of the email.

Zero debt came with its own riders. It would be fair to say that Bahl knew all along this wasn’t about RIL funding him so that he could set his house in order. This is because RIL brought in Rs.2,200 crore or so through the rights issue and Network18 had to use Rs.2,100 crore of it to buy RIL’s stake in ETV.

Clearly, RIL was calling the shots from 2012. If the deal was only about financing, ETV wouldn’t have been in the picture at all. Thanks to the ETV deal, Bahl had to pay Reliance Rs.2,200 crore back to free his holding. Without ETV, that amount would have been far, far less.

And then Bahl had performance targets to meet. According to several insiders, he was under tremendous pressure to get his house in order. “What Reliance did to Raghav is teach him financial discipline,” said the ICICI banker quoted earlier. “He was now accountable to a company which believes in keeping a tight control over finance.”

The endgame

It was then that Bahl embarked on a journey of massive restructuring. Newswire18 was sold off to Samara Capital. Infomedia18, a division housing Yellow Pages, Ask Me and several trade publications, and a huge cash-guzzling unit, was shut down. Sports18 was wound up. Business heads across the group were told to get their act together, hurtle towards breakeven or meet the same fate.

In mid 2013, several Internet properties such as,, and were trimmed. Employees across the company, nearly 900 people, were laid off in two weeks flat. It was a bloodbath.

Not a surprise then that across Network18’s offices in Noida and Mumbai, the mood was one of anger. Employees were being called into cubicles and handed pink slips. The payouts were generous, but in a tight market with not many jobs around, employees felt a sense of helplessness. And yes, retrenchments happen, but the way they happened at Network18 was a bit strange.

Parked outside the office in all their glory were Saikumar’s shining black Jaguar XJ, COO Ajay Chacko’s BMW XI, Web18 CEO Lakshmi Narasimhan’s Skoda Laura and Raghav Bahl’s Audi. Employees looked at them for answers. They didn’t get any. And they left.

In 2014, it was clear that whatever Bahl had done, it was getting him somewhere. The group was in much better financial shape since the money from RIL had come in. Bahl took on an active, political stand by showcasing himself as a champion of the Think India campaign, a platform to influence public policy through public speaking engagements with policy makers, business leaders and social thinkers. He was often seen talking up growth and change.

In a letter to Network18 employees dated 1 January, Bahl said: “Since I expect 2014 to be a year of major action/change/renewal, I will keep the words brief, since it’s the action that will matter and do all the talking! News will diversify, entertainment will fly, digital will take off, and e-commerce will begin to pay back. Inshallah.”

Yes, 2014 has been a year of major action, change and renewal at Network18. Only, as part of that process, Bahl finds himself out of the company he took 21 years to build.

Mobis Philipose contributed to this story.