Mamata, entrepreneur take over at Kolkata TV6 min read . Updated: 29 Sep 2009, 06:16 PM IST
Mamata, entrepreneur take over at Kolkata TV
Mamata, entrepreneur take over at Kolkata TV
Kolkata: In a move reminiscent of jute mill takeovers, Union rail minister Mamata Banerjee-led Trinamool Congress—West Bengal’s main opposition party—has wrested control of Kolkata TV, which until May was among the most watched Bengali television news channels, without buying a single share of SST Media Pvt. Ltd, the firm behind the channel.
Backed by the Trinamool Congress and young Kolkata-based entrepreneur Kaustuv Ray, the channel is now being run by its 171 employees, while SST Media’s founder and former managing director Tathagata Dutta is struggling to secure his personal assets from being seized by lenders. SST Media is currently facing liquidation proceedings at the Calcutta high court.
In January 2008, Hyderabad-based Associated Broadcasting Co. Pvt. Ltd, which runs TV9 news channels in Andhra Pradesh, Karnataka, Gujarat and Mumbai, had acquired a 51% stake in SST Media for Rs16 crore. Associated Broadcasting had paid a premium of Rs3.55 on the face value of SST Media’s shares and had acquired them for Rs13.55 each.
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Dutta held 49%, but as part of the same deal, pledged 35% of SST Media’s shares with Associated Broadcasting to borrow Rs9.12 crore, which has not been repaid. Effectively, the Hyderabad-based firm has so far invested Rs25.12 crore in SST Media for an 86% stake.
The channel went aground because “it couldn’t generate enough revenues", said Dutta. Kolkata TV’s operating expenditure was Rs1.7-1.8 crore a month, and at least one-third of it was the cost of distributing the channel through cable operators. “But in terms of audience, we were pretty much on top—No. 1 among Bengali news channels for a long time," Dutta said.
Persuaded by the Trinamool Congress, Ray, whose RP Group manufactures computers and produces television software, emerged as the white knight. In June, it offered to buy the shares held by Associated Broadcasting. But after several rounds of discussions, talks fell through because they couldn’t agree on a price.
“Ray offered Rs5 crore for Associated Broadcasting’s shares," said a Kolkata TV employee who spoke on condition of anonymity. “But it seems they want more…they claim they have some more offers."
When contacted, Ray said Kolkata TV is a tenant of one of his firms. He bought in June the Park Street office out of which Kolkata TV operates. “We had signed an agreement to buy that space (7,500-8,000 sq. ft) in October last year. The deal was closed recently."
Asked specifically if he was keen to acquire equity interest in SST Media, Ray added: “We have been supplying software to Kolkata TV and many other channels such as ETV Bangla, Zee Bangla, NE Bangla and Doordarshan. I cannot offer further comments because the matter is sub judice."
“We are currently exploring various options available before us and we are yet to take a decision on selling our stake in Kolkata TV," said M.K.V.N. Murthy, chief financial officer of Associated Broadcasting. “The situation is still very fluid." Associated Broadcasting is the brainchild of Srini Raju, brother-in-law of Satyam Computer Services Ltd’s founder B. Ramalinga Raju. Srini Raju served on the board of Satyam till 2000, when he quit to focus on his own interests, venture funding and media.
In the first week of May, Kolkata TV went off air, following which its employees approached Banerjee for help. By then, liquidation proceedings had already started and Associated Broadcasting’s representatives had stepped down from SST Media’s board. Kolkata TV had also stopped paying salaries to its employees.
“When Kolkata TV’s employees approached our leader (Mamata Banerjee), she gave me the responsibility to find a solution," said Sovan Chatterjee, a Trinamool Congress leader. “We are working in the interest of Kolkata TV’s employees and vendors, who are to receive a lot of money from the company."
Confirming that he was the person who persuaded Ray to take interest in Kolkata TV, Chatterjee added, “We are grateful to Kaustuv and his RP Group for paying the salaries of 171 employees in July, and it is our commitment to them that they are going to receive their salaries every month from now on." Chatterjee, however, claimed the Trinamool Congress had no plan to “usurp the channel".
The channel is being run by its employees under an order of the Calcutta high court, while Ray is trying to take possession of Kolkata TV’s assets, according to the channel’s employee mentioned in the first instance. “He already owns the office, and is currently in discussion with lenders who have seized the cameras, editing devices and OB (outdoor broadcast) vans. If he manages to acquire these assets, he will have complete control over the assets of the channel."
Ray, however, may yet need to acquire Associated Broadcasting’s and Dutta’s shares in the channel to retain Kolkata TV’s licences, he added. “Dutta has given up and is willing to transfer his 14% stake to anyone who would absolve him of liabilities—his home is mortgaged to State Bank, which had lent Rs4 crore to the company (SST Media)."
Ray’s principal money spinner is his computer manufacturing business. His RP Infosystems Pvt. Ltd, which sells PCs under the Chirag brand, had a turnover of Rs563 crore and a net profit of Rs29 crore in fiscal 2009. A sports enthusiast, Ray, who is in his mid-30s, owns a football club called Chirag United. It plays in the premier division of the Calcutta Football League. He is also the first Hindu president of the Mohammedan Sporting Club—one of the leading football clubs in Kolkata.
Interestingly, Dutta made his money from computers, too. He and a partner were the promoters of Xenitis Infotech Ltd, which sold low-cost PCs under the brand name Amar PC in West Bengal, Apna PC in North India, and Amchi PC in Maharashtra. The duo started the channel in March 2006, but soon split and Dutta ended up with Kolkata TV.
SST Media’s total liabilities are around Rs70 crore, according to an internal note that has been reviewed by Mint. It borrowed from three banks—UCO Bank, Bank of India and State Bank of India—some Rs28.33 crore. It owes vendors Rs21.45 crore, and employees, Rs2.5 crore.
The happenings at Kolkata TV are a throwback to jute mill takeovers through so-called managing agents; in the 1970s, 1980s and 1990s, scores of embattled jute mills in West Bengal were taken over in a similar manner. While owners fought cases to secure assets from being seized by lenders and statutory authorities, rival groups hijacked operations through court-appointed managing agents with the support of political bigwigs and employees, who for the sake of their livelihood would do anything to keep the mills running.
The phenomenon of political parties directly or indirectly running television channels is common in south India. SunTV Network, which runs a bouquet of channels in several south Indian languages, including Tamil, is promoted by the Maran family, closely related to the family of M. Karunanidhi, the patriarch of the Dravida Munnetra Kazhagam and Tamil Nadu chief minister.
“As long as I was responsible for the editorial content of Kolkata TV as its chief editor, I made sure that we were completely unbiased," said Dutta. “However, I have lost control and hence cannot comment on what is going to happen in the future."
There are now four 24-hour Bengali television news channels—Star Ananda, 24 Ghanta, Channel 10 and NE Bangla—besides Kolkata TV. The “takeover" of Kolkata TV by the Trinamool Congress gains significance in the light of the forthcoming assembly election in West Bengal, scheduled for the summer of 2011.
Incidentally, Ray was an activist of the Students’ Federation of India—an organization linked to the Communist Party of India (Marxist)—when he was a student of economics at Kolkata’s Jadavpur University.
C.R. Sukumar contributed to this story.
Illustrations by Jayachandran / Mint