Two years after media mogul Subhash Chandra first made a bid to acquire the floundering news agency United News of India, and following protracted legal battles and widespread protests that divided India’s media community into two camps, the Essel Group chairman has decided not to pursue the embattled property anymore. Following an out of court settlement with petitioners, including the ABP Group and The Hindu publisher Kasturi & Sons Ltd, who contested Chandra’s acquisition of a controlling stake in the news agency, UNI has paid back Rs27 crore of the Rs32 crore that was paid to acquire a controlling stake. The remaining amount, which has already been spent, will be paid back in instalments, according to a person familiar with the agreement.
“All the shareholders were consulted before we were offered the stake. But once we entered, then some companies like ABP and The Hindu did not like it and the matter went to court. We have cooperated on every decision by the board but now the company has reached a stage where it is not even able to pay salaries. We could have waited for another ten years in litigation, but the prospects of revival for the company was going down by the day, so we have decided to withdraw,” said Jawahar Goel, a member of the UNI board representing Media West Pvt. Ltd, the Essel Group company that acquired the UNI stake. Goel is also the younger brother of Subhash Chandra. Goel said the group will not pitch for the reelection of the four directors representing the group in the forthcoming annual general meeting of UNI. Apart from Goel and Chandra, Media West representatives on UNI board were P.C. Lahiri and C.S. Vishwanathan.
Chandra is a pioneering entrepreneur in the Indian media space known for moving first to capture the potential of emerging technologies. He owns a significant slice of India’s media pie, with holdings including the Zee network of satellite television channels, direct-to-home market leader Dish TV India Ltd, cable distribution firm Wire and Wireless India, Agrani Satellite Services and part ownership of Mumbai-based daily Daily News and Analysis.
Chandra acquired a controlling stake with the stated mssion to “help regain UNI’s lost position”. However, the bid to acquire a piece of India’s media heritage–UNI was founded in 1956 (though operations did not start till March 1961) and remained India’s preeminent news agency alongside the Press Trust of india for decades before losing ground to the latter–soon ran into legal hurdles with a group of shareholders contesting the transaction in the Company Law Board. The petitioners were ABP Pvt. Ltd (Anand Bazar Patrika), Manipal Media Network Ltd (Udayavani), Kasturi & Sons Ltd (The Hindu) and The Printers (Mysore) Ltd (Deccan Herald).
The petitioners argued that the allotment of shares to Media West changed the character of the company and also resulted in creation of a new and absolute majority. The other objection was that by coopting four representatives on the board, the management control of the agency was handed over to Media West. In an order dated 21 January 2008, the Company Law Board held the transaction null and void. Essel Group subsequently filed an appeal in the Delhi High Court and the settlement has now been reached while the litigation was still on.
The Hindu editor-in-chief N. Ram welcomed the development. “It’s good that it has been amicable settled. The future of the employees and their journalism were being held hostage due to this dispute. I would like to compliment Subhash Chandra on his exit from this complex situation. Now the challenge is to make UNI financially viable. It has been neglected for years and now a great deal of thought and action will be needed to revive it. PTI is doing well and we need an alternative source of news–that is important,” he said.
ABP Group chairman Aveek Sarkar and CEO D.D. Purkayasta could not be reached for comment. Essel Group’s Goel and Purkayasta are learnt to have driven the settlement.
“We welcome the settlement. We can now focus on the news operations and reenergize UNI,” said A.K. Bhandari, chief editor and general manager at UNI, who has worked at the organization for some 40 years. Bhandari confirmed that a month’s salary and some monthly reimbursements such as leave and travel allowance are due. “These were pending before I took over in October and will be paid as and when we have the funds,” he said. “We are very hopeful. We have already stepped up news operations. While earlier we were sending some 400 stories in a day, now we are able to produce about 600 stories and we will soon be able to send out 1,000 stories in a day.” Bhandari said that while most news organizations are laying off staffers, UNI was retaining everyone and in fact hiring new ones. “Last week we hired 20 people. So things are improving and we are on the right path,” he added.
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