InvestorQ : Do you see Adani having the upper hand in the NDTV deal or do you see the Roy family having the upper hand?
Dilmini Mercia made post

Do you see Adani having the upper hand in the NDTV deal or do you see the Roy family having the upper hand?

Dawn Cherian answered.
3 weeks ago

Without a doubt, it does appear that Adani has an upper hand. Here is why. The CBDT bar is to prevent Roy and his wife from transferring and monetizing the benefits of the shares held by them where tax payments are due. The restrictions pertain to the transfer of NDTV shares from the books of RRPR holdings. Now, even after this deal, that does not change. It still remains in the books of RRPR Holdings. The ban does not apply to RRPR Holdings and it is only the shareholding of RRPR Holdings that is changing, not that of NDTV directly.

In a sense it looks like delaying tactics from the NDTV promoters. The reasons are not hard to understand. The NDTV group has tried to consistently paint itself as an independent media house. Obviously, being taken over by a large business house like the Adani group it does not suit the NDTV narrative. More so, since the Adani group is considered to be close to the incumbent government. This dents NDTV’s carefully cultivated left leaning image.

However, there are two things to remember here. Firstly, the deal to issue warrants happened in 2009, nearly 10 years before the CBDT order was passed. So, NDTV cannot block implementation of commitments on the grounds that there is a CBDT ban. Secondly, Adani who may have the upper hand since the loan taken by NDTV promoters was not repaid, forcing conversion of warrants. If the NDTV promoters had the ability and the willingness to repay the loan then this situation would not have arisen.

To sum it up, it is high time that the NDTV promoters see the writing on the wall. They have to now lose control over NDTV and there is no choice. There is really not much that they can now do to stop the deal, except delay it for some time. Even from a business case perspective, it is obvious that big media is gravitating towards the big business houses. After all, in a competitive media scenario, you do need balance sheet size to handle the massive outlays needed and to handle new challenges like digital and OTT in media.

To be fair, Adani has played by the book and is exercising the warrants in a fully legitimate manner. You really cannot object to that. CBDT ban on NDTV promoters pertains to voluntary sale and transfer of shares by the Roy family. It however does not apply to discharge of a liability on account of an agreement that pre-dates the CBDT ban. There is one more angle to it. The rally post the news shows that is what the markets also want; a shift in ownership. There is just no point in delaying the inevitable.