Just 1.14% Stake In DEN Creates Media Buzz: What’s Reliance Upto?

Reliance Strategic Investments, a subsidiary of Reliance Industries, has picked up 1.14% stake in DEN Networks.

DEN is one of the two leading & listed content aggregation and distribution companies in India, Zee Turner Ltd. being the other one. Interestingly, the script hit the Upper-Circuit Buzzer on Bombay Stock Exchange when investors got whiff of the deal.

Through the deal RIL should get preferential access to the content of all the media properties of Network18 and its associates and subsidiaries like digital media and the TV18 channels. Reliance Industries appears to be getting heavily into the distribution channel lately & rumors of RIL planning to pick up a minimum 26% stake in leading cable operators are abuzz.

We tried to connect the dots.

Reliance Entertainment, has bought controlling stakes in one of the largest TV broadcasters Network 18 and in Eenadu or E.TV as it is popularly known. Further, it has the mobile front covered with Reliance Communication. What it presently lacks is reliable Cable TV Distribution, which offers tremendous untapped growth potential.

Reliance has vested interest in the up comming fourth-generation (4G) broadband services. Hence as part of its strategy to reach consumer homes for 4G services, Reliance will need an established distribution network. Using DEN’s pre-existent Network will help Reliance an easier entry than laying down its own independent network in India!

The Strategy based on the Digitization bill, is neatly summarized by Devendra Parulekar, partner at Ernst & Young India, “The digitalization law will ensure steady revenues from cable distribution and this revenue remains steady even when there are recessionary trends in the markets” So Reliance could also be bracing itself to have an early mover advantage.

Overall, the company is slowly and methodically capturing the media development and media delivery network  in India. What are your views?

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