Zee Media in a bidding war to acquire FM radio station RBNL.

Zee Media Corporation Limited (ZMCL) may still be fighting its own battles, but that has not diminished its appetite for inorganic expansion. In the latest development, Zee Media has got board approval to bid for Reliance Broadcast Network Limited (RBNL). It may be recollected that this media company belonged to the Anil Ambani led ADAG group. RBNL has also been declared bankrupt and referred to the NCLT due to its inability to continue as a going concern in the Indian context. For now, RBNL is under the corporate insolvency process by the National Company Law Tribunal (NCLT). RBNL has a very valuable portfolio of licenses to operate Radio FM stations across India and that is what Zee Media is eyeing at this point of time.

On the 05th of May 2023, the board of Zee Media has passed a resolution granting approval to the Company to submit Expression of Interest (EOI) for RBNL. Obviously, since the latter company is under liquidation, the bids will have to be submitted to the Corporate Insolvency Resolution Professional (CIRP) of Reliance Broadcast Network Limited (RBNL). Now it is the CIRP that is authorized to take further action in relation to the Invitation for Expression of Interest for Submission of Resolution Plan for Reliance Broadcast Network Limited (RBNL). Zee announced a mega merger with Sony about a year and half back which brough an end to its feud with Invesco, then the largest shareholder. Eventually, Invesco made a total exit from Zee Entertainment.

Quick word on the RBNL insolvency

The National Company Law Tribunal (NCLT) had earlier admitted the insolvency plea by IDBI Trusteeship Services against Reliance Broadcast Network. IDBI Trusteeship had filed this insolvency plea against RBNL at the request of L&T Investment Management, which is now part of HSBC Mutual Fund. L&T Investment Management had invested in bonds of RBNL, but the loan was not repaid and the amount of Rs174 crore is still outstanding. This had led to losses for L&T Investment Management and hence the insolvency plea against RBNL. Incidentally, Reliance Broadcast Network Ltd (RBNL) runs BIG FM radio channel, which is quite popular among the young crowds in India.

At that time, the court had appointed Rohit Mehra as the insolvency resolution professional to manage the transition for the insolvency proceeds being distributed in a fair and transparent manner to the creditors of the company. It may be recollected that L&T Investment Management Limited had then subscribed to the Non-Convertible Debentures (NCDs) of RBNL worth Rs200 crore issued in three tranches. There had been a major issue on the jurisdiction of the insurance plea with the NCLT. In fact, before this petition, the counsel for RBNL had argued that the Mumbai bench of NCLT did not have the jurisdiction in the matter since both parties had given non-exclusive jurisdiction to New Delhi Tribunals in case of disputes.

That may be more of a technical issue, but the key issue here is how does Zee benefit from this. For starters, it expands the offerings of Zee group and now also integrates FM radio stations as part of that. The RBNL deal will enable the Zee Media group to get access through an arm’s length deal with RBNL. Most of the media properties have huge potential in India where entertainment is one of the biggest industries. Clearly, Zee group wants to atone for the financial excesses of the last 10 years and now wants to focus on its core media strengths through a mix of organic growth and inorganic mergers and acquisitions.