NDTV - Malice Is Back

So after lying low for quite a while Alice is back. And I suppose there is no one better who could explain the violence or chaos in our modern times. Well, that’s not me but Barkha Dutt talking. In her latest post in Hindustan Times she gets Alice from wonderland to explain ‘Why this Kolaveri Di’. I would have thought the popular Tanglish song Kolaveri would have explained the slap that Sharad Pawar got from Harvinder Singh. Not enough, maybe! So Kolaveri and Alice collaborate for the first time to explain the growing intolerance in our society. This man who slapped Pawar is the cause of all this pain in her. Of course, Barkha does not find it worth lamenting that a few days ago some politicians violently kicked some men at the Phulpur rally of Rahul Gandhi. That group of politicians also had a man who is the spouse of a co-worker of Barkha at NDTV. I call it all “experience truth, my way”! But let me not make it all about Alice and our intolerance because this one is about malice in a maze of the financial blunderland called NDTV. Barkha usually relies on Alice to explain the toughest of issues so I wonder if Alice will be handy to take NDTV through its latest blunderland. Well, anyone alleging anything against NDTV is nothing but Malice, that distant cousin of Alice.

On November 25 news broke online about an affidavit filed by an IT Commissioner, S.K. Shrivastava,  in the special CBI court of Judge O.P. Saini. This application sought to make him a prosecution witness in the 2G scam trial. Among many other contentions, one that deserves attention is the allegation he makes that NDTV and group companies were involved in laundering over 2000 crores of bribe money from the 2G scam. The application also mentions attempts by then Finance Minister P. Chidambaram to block investigations into the financial dealings of NDTV and group companies. That’s really the long and short of it. Should you wish to go into the entire 32 page affidavit you can find it HERE. It does make sorry reading to say the least.

But the story of NDTV's financial stories started a long time ago. Read the post "NDTV- We the poodles, Crime pays" to refresh an old case from the 1990s. How that case got buried is a mystery of sorts.

Ever since Radiagate broke in November 2010 NDTV has been under a scanner. In an article titled “NDTV juggles funds, shares abroad, avoids tax” (Dec 2010) The Sunday Guardian explains how a number of subsidiaries were set up abroad and used to violate Indian corporate and tax laws. Here’s an excerpt:

“…To trace the financial jugglery involved in the whole process light must be shed on how these companies have been operating. In 2006-07, New Delhi Television Limited set up a legal entity in the Netherlands under the name NDTV BV, which in turn set up the NDTV Network Plc in the UK. The Indian company invested around Rs 57.45 lakh in the shares of NDTV Networks BV, thus making it its 100% subsidiary. NDTV BV, in turn, set up Plc as an indirect subsidiary…..The UK subsidiary also raised $100 million by issuing convertible bonds through private placements. NDTV's annual report of 2007-08, under the category of "contingent liabilities not provided in respect of"…..Mention must also be made of a November 2010 report that says US based Scripps Networks is acquiring 69% stakes in NDTV Lifestyle for $55 million. NDTV Lifestyle is held by NDTV Network Plc, UK. Take another November 2010 report, which says, shares of NDTV shot up by over 7% after the company announced that NDTV Networks Plc, has repurchased the $100 million coupon bonds due 2012….Is wealth being created and retained abroad without any benefit to NDTV shareholders?”

That was after the same Sunday Guardian carried a previous story (Dec 2010): “NDTV-ICICI loan chicanery saved Roys”. “NDTV Limited and associate companies in which Prannoy Roy and Radhika Roy have a majority stake have indulged in financial misdemeanours and malpractices in connivance with ICICI Bank, and raised funds by misdeclaration of the value of shares in NDTV. These shares were held by a company called RRPR Holding Private Limited. The deal took place between July and October 2008 during a "buyback" of shares from the stock market announced by NDTV Limited at the price of Rs 439 per share”. A lot more has been written and Sunday Guardian sent NDTV nine questions to respond to. NDTV CEO KVL Narayana Rao responded thus: “Your fax of 3rd December 2010, is riddled with innuendos and false accusations. While we have answered all your questions, we reserve the rights under civil and criminal law both against your publication and against any individuals in your organisation”. He then goes on with further explanation which doesn’t really seem convincing except for inferring malicious accusations. But threat of criminal defamation? Why is it that NDTV is so trigger happy with such threats? And while Barkha Dutt mentions there is a case in the courts I am yet to find any defamation case filed by NDTV against Sunday Guardian anywhere. That story rested there.

How does Alice find her way through such a maze of financial blunderland? One might even wonder what does an ordinary news and entertainment company, like NDTV, from India do with so many companies established abroad. There’s even mention of a subsidiary in Holland that has just a postal address with no office, employees or any operations. Surely, this maze of wonderland must have some purpose. Mystery! Even more intriguing is the fact that since NDTV went public it has consistently been making losses and its share prices have hit new lows frequently. Moneylife, a financial site managed by Sucheta Dalal, has a stinging report on its performance. Here are some excerpts from “Glamour stocks, ugly returns” (August 2011):

“NDTV got listed in 2004 and is trading below its listed price after seven years. It has given a negative return of 19% compounded in the past five years and a total shareholder return (TSR) of negative 66% for the same period…..Its credibility is at a nadir (after the recent phone-tapping controversy) and its finances are in a mess. NDTV has rarely made money from operations. For the past few years, its consolidated operations have been making cash losses and it has been running on money made by selling loss-making subsidiaries to strategic investors. But capitalism is not at work in India. NDTV won’t fade away in a hurry. Indeed, every few months, the financially-beleaguered NDTV manages to get ‘strategic’ investors with deep pockets and top-flight private equity investors to step in and pick up big chunks of its equity at fancy valuations. In the 3rd week of June, DE Shaw, a $20-billion hedge fund which prefers to call itself an ‘investment and technology development company’, picked up a 14.2% stake in NDTV providing an exit to Goldman Sachs, another blue-chip investor that probably exited at a loss. NDTV’s stock was listed at Rs100 in 2004; the stock rose to Rs511 in January 2008 on the promise of a financial performance which has never materialised. It is now at Rs63—down 32% even from the issue price, after seven years of listing—and down a whopping 86% from its peak. Interestingly, despite the DE Shaw acquisition, the stock has barely moved. Maybe, the market doesn’t quite trust this information. That says a lot about not just NDTV but DE Shaw as well. As happens with glamour stocks, DE Shaw could be a front for someone else. Coincidentally, DE Shaw has a tie-up in India with Reliance Industries to sell financial services”.

To on ordinary blogger accusing NDTV of shoddy journalism they issued a legal notice charging him with libel. NDTV threatened those who leaked the Radia tapes with defamatory action. NDTV threatened Sunday Guardian with legal action for defamation and false accusations. In the last two cases we have seen no record of any legal cases being filed by NDTV. To the current petition by S.K. Shrivastava, the IT Commissioner, NDTV has once again alleged malice and defamation. Their CEO Vikram Chandra, has tweeted that NDTV has filed a defamation suit against the man on November 25. A detailed report about such a case was not available anywhere, including their website, at the time of writing. To the Moneylife article one doesn’t know if there was ever a response. Vikram also stated that a previously similar petition of Shrivastava was dismissed with fines. But that was about other IT officers and this one need not meet the same fate. Charges for laundering 2G Scam money are not about some IT officers alone, it involves black money and a national issue.

Bankers and lenders usually have a 1000-day test for a business to break even or even make profits. Normally a business would find it difficult to survive otherwise. NDTV seems to survive regardless of all business failures and financial losses. Does it make sense? And whenever someone questions their financial dealings it’s either false accusations or worse, MALICE! The options are for NDTV to come clean against all the allegations and state their position in a detailed document. The allegations in Shrivastava’s petition are serious enough to send many people to prison. Time will tell! And that may certainly not be a wonderland Alice might want to explore.