On Wednesday, the Central Bureau of Investigation (CBI) filed an FIR against NDTV promoters Prannoy Roy and Radhika Roy for bribery and breach of foreign direct investment (FDI) rules in respect of an investment of $150 million made by US-based NBCUniversal.
Earlier, on August 9, the Roys were stopped at the Mumbai airport from flying to Kenya on a ‘lookout’ notice in respect of another CBI case filed in 2017 for having caused a loss of Rs 48 crore to ICICI Bank.
Is it a matter of time before the duo is arrested for ‘custodial’ interrogation? A more frightening spin-off could be shutting down of the news network. In rejoinders to the CBI’s charges, NDTV has maintained that the government action was a warning to news media ‘to fall in line’. What is the truth?
The two chargesheets
On June 2, 2017, an FIR was registered by a private shareholder against Prannoy and Radhika Roy claiming that they had conspired to defraud the ICICI Bank of Rs 48 crore. The story begins in July 2008, when the Roys took a short-term bridge loan of Rs 500 crore from IndiaBulls Finance. Three months later, the money was paid back by raising another loan of Rs 375 crore against a pledge of all their shares in NDTV.
To repay the ICICI Bank loan, the Roys then raised a ‘zero-coupon’ optionally convertible loan of Rs 403 crore from Mukesh Ambani’s Reliance Ventures; and finally, in August 2009, 10 months after the ICICI Bank loan was taken, the bank took a haircut and accepted a reduced sum of Rs 350 crore.
The CBI has totalled the principal unpaid amount of Rs 25 crore, plus the interest that was not paid, and came to the conclusion that ICICI Bank was forced to suffer a loss of Rs 48 crore. However, banks routinely take a ‘haircut’ when a loan becomes stressed. Most clinching is that the bank had no complaint, and in a letter dated August 7, 2009, said the debt was fully paid. So, where was the criminal fraud?
The second transaction under the scanner is the investment of $150 million by NBCUniversal for 26 per cent stake in the non-news, entertainment channels like NDTV Imagine. For this investment, the CBI has said that NDTV floated subsidiaries abroad and brought in money and laundered it through yet unknown public servants.
The CBI has also said that the company raised $194 million through preference shares and warrants, and another $150 million from NBCU via NDTV International Holding BV in the Netherlands in April 2008.
Various investors were repaid in November 2008, while the NBCU investment was settled by buying back NDTV Network International Holding shares in October 2009. The CBI case is that NNPLC got FIPB approval for investments in violation of FDI provisions.
The charges are complex and will need a detailed trial in court. However, what begs an answer is: Why was the investigation opened more than 10 years after the NBCU transaction? It is also difficult to digest that international giant General Electric, which then owned NBCU, would risk its reputation for such a complex but small money laundering scheme.
Financial turaround
Prannoy Roy and NDTV have had a long and bumpy ride. The company, incorporated in 1988, did well as long as it was a content provider to television. Besides branded programmes like the World This Week for Doordarshan in its early days, NDTV provided news for the Star News channels. Its financial problems started when it entered broadcasting in 2003 with two channels of its own. Bad management and a bloated staff strength ensured there was hardly a year it made an operational profit.
However, in recent months, NDTV has pulled out of the red with a vigorous policy of cost-cutting and developing a strong digital platform. After years of consecutive losses, NDTV Ltd notched a PAT of Rs 13.32 crore for financial year 2018-19. The April-June period of this fiscal was its best quarter in six years, turning in a net profit of Rs 15.2 crore on the back of 30 per cent growth in digital revenue.
For a company that is finally turning around financially, it will be unfortunate if NDTV goes under for political considerations. The network has not been a supporter of the Narendra Modi government. Its anchors like Ravish Kumar, NDTV India’s editor, have been known critics of the government.
Democracy requires pluralism. A free press, protected by the fundamental right to freedom of speech and expression under Article 19 (1)(a) of the Constitution, is an important limb of that pluralism. It will indeed be a sad day that statutes on economic offences are bent to silence media groups like NDTV.
Turnaround
After years of losses, NDTV notched a PAT of Rs 13.32 crore in FY2018-19. The April-June period of this fiscal was its best quarter in six years, turning in a net profit of I15.2 crore. For a company that is finally turning around financially, it will be unfortunate if NDTV goes under for political reasons.