Exclusive: HT Media Considering Demerging Hindustan; Time Frame Of Three Months

Hindustan

HT Media Ltd, publisher of newspapers such as Hindustan Times, Mint and Hindustan, is considering demerging the Hindi business of the company. The company has mandated consultant Ernst & Young to study the viability of the demerger. CEO Rajiv Verma confirmed the development, and said he has a time frame of three months in mind to execute the demerger.

The company had obtained shareholder approval during the July-September quarter of 2007 (see notes in this results statement).

Verma said even though the company had obtained shareholder approval earlier, it didn’t go ahead with the plan as the business was still being incubated and expanded. “We have invested quite a bit of money into it, and it has given us very good returns, both in terms of marketshare as well as revenues. There is a lot of value in that business and that is where the future is,” Verma said.

The Hindi business consists of Hindustan, which has 13 editions in five states, according to the company website. The demerger will be subject to some legal approvals.

The recently amended guidelines on FDI will mean that even though HT Media doesn’t have space for any more foreign direct investment, it can bring in more FDI to a downstream company in which holds a majority stake. Verma, however, said that he is not immediately looking to attract investments. “We don’t have a large funding requirement in that business and we are not immediately looking to raise funds there,” he said.

HT’s move to demerge the Hindi business coincides with Dainik Bhaskar’s move to go public.

While the metro-based English print media was hit badly by slowing ad sales during the downturn, and even amidst talk of a “structural shift” that may result in ad revenues not returning back to the peak levels for these dailies, the Hindi market hasn’t been hit as badly.

The one interesting trend that emerged during the earnings season for the quarter ended 30 June was precisely this. While large metro-based ad-dependent media firms such as HT Media, NDTV and TV18 relatively poor financial results, media firms with large exposure to the regional markets, such as Jagran Prakashan, Deccan Chronicle and Sun TV Network, reported growing revenues and profits.

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