Will The Ambanis Become India's Murdochs

If the two estranged brothers, Mukesh and Anil, smoke the peace pipe, their media empire will eclipse everyone else’s

Alam Srinivas / For The Goan  13 April 2013

Last year, Rupert Murdoch, the chairman and CEO of the $34-billion News Corporation and an undisputed global media czar, urged investors not to “judge us the way you would a conventional company”. He added that News Corp’s corporate culture was different as it knew that business models that work today might become obsolete tomorrow. Hence, “we are always investing in the next generation – especially when our established models are doing well”.

Such statements could have easily been echoed by either Mukesh Ambani or his younger brother, Anil. Over the past eight years, ever since they split in 2005 after a no-holds-barred public fight, the two siblings have slowly, although separately, thought and acted like Murdoch. They have done in India, what the controversial media baron has achieved in markets as diverse as the US, UK, Asia, Australia and Latin America. In some ways, the Ambanis are better off than Murdoch.

After years of acrimony, now that the Ambanis have taken the first baby steps to partner with each other, they can emerge as the unchallenged media czars in India. If Mukesh and Anil get their act together, as they are more likely to do in telecom and media, they can overwhelm a Bennett, Coleman & Company, which is present across platforms (print, TV, digital). They can mercilessly overpower the dominance of a Zee Group, which is integrated vertically in TV (as a broadcaster and distributor).

Recently, the two hitherto-estranged brothers inked a deal that allowed Mukesh to use 1,20,000 km of the optic fiber network, owned by Anil, to launch the former’s 4G/broadband services. They indicated that this was the beginning of more such agreements, whereby both could use their combined telecom infrastructure (telecom towers and additional fiber pipes) to deliver news and entertainment content. Analysts shouted with glee that this was a win-win partnership.

But, if the brothers also agree to share content and other distribution platforms (digital and direct-to-home) in the near future, their Indian business model will be akin to Murdoch’s international one. In fact, given the lack of regulations and restrictions on cross-media ownership in India, contrary to the situation in the US and Europe, the Ambanis’ blueprint will be more expansive and dominant. Together, they can do what Murdoch has only dreamt about, tried, and failed.

Browse through the 2012 annual report of News Corp and you will get a sense of Murdoch’s vision and global presence. He is one of the largest generators and acquirers of content, be it news, sports and entertainment. He owns TV and cable channels (the famed Fox bouquet of news, business and entertainment channels in the US, and the Star network in India); produces, co-produces and buys movies and TV serials; and has telecast rights to sporting events (National Football League and Major League Basketball). This content is beamed across countries and geographies such as India, Greater China, South East Asia, Middle East, Africa, the UK, Europe and North America.

His reach in print media is unprecedented. He owns the Wall Street Journal, Barron’s and the New York Post, apart from dozens of other publications in the US. His print properties in the UK include The Times, The Sunday Times, and The Sun. Of course, in Australia, his native country – Murdoch is now a US citizen – he manages 140 “national, metropolitan, suburban, regional and Sunday titles”. And one cannot forget his control over HarperCollins, the publishing house.

Indirectly, both the Ambani brothers have access to news content. Through a trust, Mukesh has given a huge personal loan to Raghav Bahl, who is the promoter of Network18 Group that owns TV news channels (CNN IBN and CNBC TV 18) and websites (moneycontrol.com and firstpost.com). The money that Bahl owes can be converted into equity at a later date, which will give the Mukesh-controlled trust a stake in Bahl’s privately-held firm which, in turn, owns Network18.

One has heard rumors that the elder brother has benami stakes in at least two Hindi news channels. Through his financial services arm, Reliance Capital, Anil has a stake in Bloomberg India (business news channel) and a minor one in TV Today (Aaj Tak and Headlines Today). In the past, he has had ‘influential’ holdings in TV Today and Network18. So, there is no reason to disbelieve that Anil can get into the news segment quite quickly through the several mutual funds launched by Reliance Capital.

The Ambani siblings also have several fingers in the movie and entertainment pie. Anil has official tie-ups with several Hollywood’s famous director/producers, including Steven Spielberg, to produce movies and the US-based CBS Group to air TV channels in India. Mukesh has sold regional channels, owned by the Andhra Pradesh-based Eenadu Group to Network18, where he has an indirect control. Through benami deals, the elder brother also owns other Hindi entertainment channels. His wife, Nita, manages Mumbai Indians, a leading cricket franchise in the Indian Premier League (IPL).

in association with Governance Now