Adani bid fought by NDTV amid concerns over press freedom

Billionaire Gautam Adani’s hostile attempt to take control of New Delhi Television Ltd. is fast turning ugly, as the media house pushes back against the acquisition bid that has inflamed concerns over the influence of powerful tycoons on the Indian press.

The first salvo NDTV, which produces and broadcasts news in English and Hindi, has fired in its defense is the assertion that Adani Group, the ports-to-power conglomerate owned by Asia’s richest person, needs approval from the Securities and Exchange Board of India to buy it.

That’s because its founders and current owners, Prannoy Roy and Radhika Roy, have been barred by the same markets regulator from dealing in shares for two years through Nov. 26, the media house said in an exchange filing Thursday. Adani Group said it had an indirect 29.2 per cent stake in the broadcaster Tuesday and was willing to buy 26 per cent more from the open market. NDTV and its founders said later they neither knew about this nor consented to this stake sale.

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While it remains to be seen if the regulator will agree, Adani’s hostile bid has already sent shockwaves through the NDTV newsroom, with staff concerned that a takeover would mean an exodus of journalists that have sought to hold Indian Prime Minister Narendra Modi’s administration to account.

The broadcaster is seen as one of the few relatively critical local news outlets of the Modi government. Some Indian politicians, journalists and rights groups have voiced alarm over the tycoon’s attempted takeover, given his close relationship with Modi. Jairam Ramesh, a lawmaker with the main opposition Congress Party, called the hostile bid “a brazen move” to stifle India’s free press.

‘Clear message’

“NDTV is acknowledged as the only surviving independent TV news channel in India as most others are identified as the mouth-pieces of the government,” said Suhas Chakma, the New Delhi-based director of the Rights and Risks Analysis Group, which monitors press freedom. “If the NDTV is acquired, it shall send a clear message that India is not a country for independent media.”

A spokesperson for Adani Group didn’t immediately respond to an emailed request for comment, though earlier this week Sanjay Pugalia, the chief executive officer of Adani’s AMG Media Networks Ltd. said “NDTV is the most suitable broadcast and digital platform to deliver on our vision.”

‘Growing restrictions’

Press freedom in the world’s largest democracy has deteriorated since Modi and his Hindu-nationalist Bharatiya Janata Party swept to power in 2014. India dropped 8 places in the Reporters Without Borders World Press Freedom Index this year and is ranked 150 out of 180 nations.

Indian authorities routinely target and harass critical reporters and news organizations, arresting journalists on “spurious terrorism and sedition charges” amid “growing restrictions on media freedom” and frequent Internet shutdowns, Reporters Without Borders said in May.

Also Read: Explained: How Adani moved stealthily to acquire NDTV stake

NDTV has been on the receiving end of raids by Indian criminal investigative agencies and tax authorities in recent years. One NDTV journalist, who asked not to be named over fears for their job, said the hostile bid from Adani had taken staff by surprise and caused uncertainty, even though operations were carrying on as normal.

The media organization is one of the few Indian newsrooms that allows reporters to cover stories that go against the government’s line, said a former employee, who spoke on condition of anonymity. The person added that Adani’s attempt to wrest control may provoke an exodus of journalists at NDTV.

‘Not a honcho’

“Prannoy Roy is not really a big mega honcho like Adani, he’s purely a television journalist who comes from an academic background -- they have an active interest in public interest issues,” said Sandeep Bhushan, a former NDTV journalist in New Delhi and author of ‘The Indian Newsroom: Studios, Stars and the Unmaking of Reporters’.

If Adani gains control, some anchors at the station “will definitely be eased out because some of them have baited the BJP,” he said.

The seeds of Adani’s move were first planted in 2009 following the global financial crisis when the Roys took a 3.5 billion rupee ($43.8 million) loan from Reliance Industries Ltd., controlled by Mukesh Ambani -- another powerful billionaire seen as close to Modi -- that eventually ended up with a closely-held firm, Vishvapradhan Commercial Pvt Ltd. The loan was made without interest and allowed VCPL to convert warrants into shares of the Roy’s RRPR Holdings, which held a 29.2 per cent stake in NDTV.

‘Get ugly’

In contrast, investors appeared to cheer the deal for its potential to unlock value in NDTV.

Adanis’ purchase of RRPR from Reliance sent shares of NDTV, valued at about $329 million, soaring. The stock has surged more than 250 per cent this year and hit the daily 5 per cent limit for second straight session on Thursday, touching a level last seen in 2008. It is currently trading at 407.6 rupees, almost 39 per cent above the price Adani is offering for the open offer.

“NDTV’s objection might delay the process, but won’t stop Adani from acquiring the stake” given the market regulator’s order expires in November, said Sonam Chandwani, a managing partner at law firm KS Legal & Associates in Mumbai.

While Adani might be able to veto any significant changes at NDTV with his current holding through RRPR, the Roy’s remaining 32 per cent stake in the company will remain a considerable barrier to a full takeover, according to Deepak Shenoy, the chief executive officer of Bengaluru-based wealth management startup Capitalmind.

“There’s no change in editorial control unless Adani gets to 50 per cent -- and if he does, it will have to be through other open offers,” Shenoy wrote on Thursday. “Don’t expect the Roys to give up easy, even in their 70s. They’ll fight this, even on the strangest technicality -- it’ll get ugly.”