Why Mukesh Ambani would be keenly watching Gautam Adani-Raghav Bahl handshake

It is surprising how few people saw this coming, although the writing had been on the wall for months. 

In September last year when senior political journalist Sanjay Pugalia quit the Raghav Bahl-promoted Quint Digital Media and joined the Adani Group as the chief executive officer and editor-in-chief of the conglomerate’s new media venture, few predicted that—in less than a year—his new and former employers would join hands. 

And yet, that is exactly what came to pass earlier this week when Bahl’s Quint Digital Media Ltd said in a stock-exchange filing that the Adani Group’s newly minted media arm, Adani Media Ventures, was buying a minority stake in its business news arm Quintillion Business Media Pvt Ltd. 

At the same time, Bahl’s company will end its joint venture with US media giant Bloomberg and will rebrand its business news website bloombergquint.com.

To be sure, this transaction is only for Quintillion Business Media and not for other properties that Quint Digital owns, such as the general and political news websites The Quint, TheNewsMinute and YouthKiAwaaz as well as Quintype Technologies, a software-as-a-service company that builds content management systems for website publishers.

So, in effect, the Adani group will be buying out Bloomberg’s 26% stake in the unlisted Quintillion Business Media and not in its Mumbai-listed parent company. 

Neither Adani nor Quint Digital disclosed any financial details of the transaction. Bloomberg also didn’t reveal any financial details. But its scale is hardly what makes this transaction significant. 

Business news and the deal’s real significance

The import of this deal lies in the fact that it potentially effectively pits Bahl’s business media venture in direct competition with another venture he had created several years earlier—the Network18 and TV18 media empire, which owns the news website Moneycontrol and business news channels CNBC-TV18 and CNBC Awaz. 

But more importantly, that media empire is now owned by billionaire Mukesh Ambani of Reliance Industries Ltd (RIL). Ambani and Adani Group’s promoter, Gautam Adani, are the two richest men in India, and indeed all of Asia, and are jostling for the top spot on the rich list.

Bahl had left Network18 in 2014 after it was taken over by Ambani’s RIL. He founded Quint the following year, and formed a joint venture with Bloomberg Media in 2016 for the business news venture. 

In 2017, the Quint-Bloomberg joint venture applied for a TV news licence. However, the information and broadcasting ministry and the home ministry dragged their feet on the licence, reportedly on account of bureaucratic and security-related issues. 

While that licensing delay hurt Bahl’s plans, it came as a boon for Network18 group’s TV news channels, which are the most dominant business channels in India and compete mainly with the Times Group’s ET Now business channel and with Zee Group’s channels.

In December 2019, a news report, incidentally in Moneycontrol, said that the Quint-Bloomberg joint venture was set to go down. The report said that Bahl’s “inability to secure a television license despite trying for it since 2016 and allegations of tax evasion and bribery” had “rattled” Michael Bloomberg, the owner and CEO of Bloomberg LP. 

After trying without success for three years to secure a licence, the joint venture eventually terminated its television division in April 2020 and said it was moving to a digital only platform, where news was webcast on the BloombergQuint website and on its YouTube channel. 

Quint’s reverse listing and stock surge

In 2020, as India went into a lockdown and then a full-blown recession in the wake of the coronavirus pandemic, like most other media businesses, Quint too saw its fortunes dwindle. The company furloughed 45 of its 200 employees, and announced pay cuts of up to 40% for employees earning upwards of Rs 75,000 a month. The company shuttered its TV business around the same time and laid off more than a hundred employees. 

Then, in May 2020, while the country was only beginning to come out of the first nationwide lockdown, Gaurav Mercantiles, a listed company with zero revenue, controlled by Bahl and his wife Ritu Kapur, acquired the content business of Quintillion Media Pvt Ltd (also owned by them), for an enterprise value of Rs. 30.58 crore. Following this related-party transaction, Gaurav Mercantile was renamed Quint Digital Media. So, Bahl and Kapur effectively managed to list their company via a reverse-merger, without having to go through a rigorous process of an initial public offering, much like in the case of a merger involving a special purpose acquisition company in the US.  

Gaurav Mercantiles had originally been a ship-breaking company and was based out of Mumbai's crammed business district of Lower Parel. It later changed its objectives to undertake media and entertainment businesses. 

News website Newslaundry reported in May 2020 that a year earlier, Gaurav Mercantiles had made a preferential allotment of compulsory convertible preference shares, or CCPS, and equity warrants to promoters and other investors.  As per the disclosure of Gaurav Mercantiles, it raised Rs 8.5 crore through CCPS and Rs 62.62 crore through equity warrants, both priced at Rs 42.50, the report added.

The Delhi-based Agarwal family, which owns Haldiram Snacks Pvt Ltd, and the UK-based investment bank Elara Capital Plc participated in the allotment, the report noted, effectively giving them 18% and 10% shares, respectively, on a post-conversion basis in Gaurav Mercantiles.

Bahl and Kapur had taken Gaurav Mercantiles over in January 2019 when its share price was in the range of Rs 20-23 apiece. Following the deal, the share price shot up, and has had a steady ride since then.  

On Wednesday, the counter hit a 20% upper circuit following the disclosure of the deal with the Adani Group, and is now trading at Rs 483. 

That gives the company a market capitalization of more than Rs 1,000 crore, which, considering its financials, seems way too inflated, especially if one considers it on a market cap-to-revenue basis, and compares it to its peers.

Interestingly, a further perusal of company disclosures shows that during the financial year 2020-21, TheNewsMinute, a news portal focussed exclusively on the four southern states of Karnataka, Andhra Pradesh, Kerala and Tamil Nadu, and the union territory of Pondicherry, brought in nearly half the revenue. In 2020-21, TheNewsMinute alone had a turnover of Rs 4.27 crore, as against Rs 4.55 crore that the other assets including BloombergQuint, Youth Ki Awaaz and Quintype brought in. 

Quint’s latest numbers for the third quarter show that between October and December 2021, it clocked a profit after tax of Rs 1.11 crore and a total revenue of a mere Rs 9.5 crore. 

But as we said, the import of this deal does not lie in its numbers. The moot question is: what will the Adani Group do with a minority stake in a media asset like Quint?

While the Adani Group itself hasn’t said much, the writing may again be on the wall, in plain sight. Both Bahl and Pugalia are long-time colleagues and veteran TV journalists who had also worked together at CNBC.

It should be no surprise if Quint and Adani make a joint bid for a TV licence, again, and challenge the dominance of Ambani’s media empire. And if that does happen, business news would be at least the second sector where Adani and Ambani would compete—after renewable energy—after avoiding the other sectors they each dominate for many years. While Ambani operates India’s biggest oil refinery, the biggest telecom company and the largest retail empire, Adani is India’s biggest operator of ports and airports, and a large power and coal producer.