In a deal code-named Project Storm, a Kolkata-based entrepreneur with interest in media, films, and computer hardware is set to take control of the seven television news channels run by the embattled Sahara Group.
Kaustuv Ray, who in 2009 took over Bengali news channel Kolkata TV in a controversial deal, is likely to be backed in this transaction by a UK-based investor, Delamore and Owl Group, according to two persons familiar with the move.
The little-known group claims on its website that it is invested in diverse businesses in over 30 countries.
The deal envisages Delamore and Owl infusing funds into the operations of the news channels to revive them and eventually taking an ownership interest in them.
Because of restrictions imposed by the Supreme Court on asset sales by Sahara India Commercial Corp., the group may not immediately sell a stake in its news channels.
For now, Ray will be given management control of the news channels for at least five years, said the two persons cited above. They asked not to be identified because the discussions between the Sahara Group and Ray are still private.
But, according to these persons, the broad contours of the deal have been agreed upon and an announcement is expected later this month. Already Ray’s Kolkata TV and the Sahara network have started to share content.
When contacted, Ray refused to comment. An email sent to Delamore and Owl’s chief executive officer Sanjeev Kumar remained unanswered. A spokesperson for the Sahara Group denied there was any plan at all to hand management control of the news channels to Ray.
Asked about the content sharing arrangement, the spokesperson for Sahara Group said, “It’s a different story.”
Back in 2009, Ray’s takeover of Kolkata TV was controversially led by one of the channel’s employees and backed by the Trinamool Congress. Faced with potential closure, Kolkata TV’s employees moved court to secure their own interest and brought in Ray as a white knight to provide working capital.
If it materializes, the deal with the Sahara Group for its news channels will be an encore of Ray’s Kolkata TV acquisition.
Though there will be no immediate transfer of shares, Ray, and the London-based investor will secure “irrevocable right to a significant stake in the news channels” if the deal with the Sahara Group goes through, said one of the persons cited above.
For months, Ray and his team have assessed the potential of the Sahara news network, and it is estimated that the channels need an infusion of at least Rs30 crore in a phased manner over the next few years.
The network beams news in Hindi and has a strong recall in states such as Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Madhya Pradesh and Chhatisgarh. Ray’s study also showed major inefficiencies in operations such as sub-optimal asset utilization and redundancies across the network, said the persons cited above. But the channels are not going to turn in profits in the short run, they added.
If he takes control of the network, Ray will streamline its operations and market the channels along with his own Kolkata TV.
But for now, Kolkata TV is going to retain its own identity and not become part of the Sahara network. The deal does not include the three general entertainment channels run by the Sahara Group.
Lately, Ray has been embroiled in controversy over his technology firm RP Infosystems Pvt. Ltd after it failed to clear bank dues in excess of Rs600 crore. Some lenders had alleged that his company had falsified invoices and lodged cases of cheating against it and Ray as its principal promoter. Ray denied the charges. One of Ray’s close associates said that after a long standoff he is close to clinching a deal with the lenders to settle all outstanding dues of the company with a one-time payoff. This person, too, asked not to be named.
Sahara has filed a defamation case in a Patna court against Mint’s editor and some reporters over the newspaper’s coverage of the company’s dispute with the Securities and Exchange Board of India. Mint is contesting the case.
Source: Mint