Closing in on the Sun empire

BY sevanti ninan| IN Media Business | 08/06/2015
For 22 years the media-politics saga of the Marans and the Sun Network was truly spectacular.
But political lineage can become a liability when ruling parties change at both state and centre, says SEVANTI NINAN
Closing in on the Sun empire

 Every few months there comes more ominous news for the owners of the Sun Network. Last August it was the Ministry of Home Affairs denying mandatory security clearance to Kal Cables which ran the cable network of the group in Tamil Nadu. In May 2015 it was a similar denial of security clearance by the same ministry to the group’s 50 radio channels. An intervention by the ministry of information and broadcasting was rejected by MHA.

 Last week  the Home Ministry’s pincers closed in on what constitutes the heart of the empire, its TV channels. On Friday  the Home ministry denied security clearance to 33 channels of  the KalanithiMaran promoted Sun TV network, on grounds of “adverse impact on economic security” of the country.  This could force the channels to go off the air  unless they go to court and  get a stay.

In March this year the  home ministry had streamlined the security clearance procedures so that the security clearance for one entity in the same media sector would be valid for other entities. The grounds for denying a licence after the March revision include a change in the board of directors or change in the ultimate beneficial ownership of 10% and above in the company, expansion of existing radio stations to border areas or naxal-affected areas, and anti-national or criminal activities.

For all three actions against Sun  the reasons cited by unnamed officials are three pending criminal investigations against Sun TV and its owner Kalanithi Maran: CBI's Aircel-Maxis case, an Enforcement Directorate case of money laundering,  as well as a pending CBI case of an illegal telephone exchange allegedly run from Sun TV's office. All three are colourful in detail, the last of these cases was lodged and pursued by the RSS ideologue S Gurumurthy who has detailed the way an entire telephone exchange came up at the Sun TV headquarters. The Aircel-Maxis deal involved Kalanithi’s younger brother Dayanidhi Maran’s alleged actions when he was  communications minister in the UPA government. The CBI investigation began then.

While hearing Kal Cables’s case when the company filed an appeal against the Home ministry’s action in the Madras High Court, the  judge observed that karma was catching up with the group. He did however stay the closure of the cable operation which the ministry was pressing for, reportedly on the grounds that the license couldn’t be cancelled because of security reasons because the cable company was only a distributor and not a broadcaster.

As media-politics sagas go in this country, that of the Marans  and Sun TV is by far the most spectacular. Kalanithi Maran  was an early pioneer, right after Subhash Chandra who started Zee TV in 1992. Quickly assessing the future potential of regional cable, Maran launched his first Sun TV channel in 1993. He was a scion of the DMK family, the channel’s offices were in the party headquarters.  He grew the empire fast and retained majority shareholding so that even a decade later he was  the wealthiest media baron in the country, owning 75  per cent of the Sun conglomerate which spanned cable, TV, newspapers, and radio.

Entrepreneurial talent was bolstered by political lineage. The former ensures that the Sun Network is a profitable company,  and as of  2014 end Kalanithi Maran and wife Kavery Maran were the highest paid corporate executives in the country.

But political lineage can become a liability when electoral fortunes change.  Between Jayalalitha  in Tamil Nadu and the BJP at the centre,  the sun is no longer shining on Sun. What the CBI and other investigating agencies might have gone slow on when the party the Marans belonged to was an UPA ally, they are now prompted  to investigate expeditiously.

Kalanithi Maran was also a pioneer in figuring out the importance of distribution dominance  for the growth of one’s  TV empire, so he  launched the cable network Sumangali and used it strategically at election time, so much so that the Sun experience was part of the testimony heard  by the Telecom Regulatory Authority  of India (TRAI) when it was deciding to separate the ownership of broadcasting and distribution.

The Sun Network  was listed  on the stock market in 2006 and was straight away valued at over Rs 9000 crore, equal to the valuation at that point of  HT Media, Deccan Chronicle, NDTV, TV Today, Balaji Telefilms and TV 18 put together. That was also around when the Sun Network’s conquest began of the rest of the country. A group company, South Asia FM acquired nine FM licenses in UP, Gujarat, Maharashtra, Madhya Pradesh and Rajasthan.  The radio network that grew out of this has now been denied security clearance by the home ministry, as mentioned above.

In the first decade of its existence Sun TV’s political clout was formidable. Kalanidhi Maran managed to have first a father (Murasoli Maran) and then a brother (Dayanidhi Maran) in the Cabinets of two successive central governments, formed by two opposing political formations! Grand uncle (M. Karunanidhi) was chief minister in Tamil Nadu for at least seven years of this decade.

Sumangali Cable Vision, Kal’s predecessor, grew its cable monopoly to cover the entire state and was known to pull the plug on channels of political rivals like Jayalalitha when necessary. It had a monopoly on TV news because when brother Dayanidhi was communications minister in the UPA government his ministry stalled Jaya TV’s proposal for a news channel.  His ministry has to give a clearance even if information and broadcasting was  the nodal ministry for permitting new news channels. At that point other channels with news ambitions, Star Vijay and Raj TV, had given up.

In 2006 Dayanidhi Maran was also accused of attempting to arm twist the Tatas and Star TV into parting with a controlling stake of their DTH venture (which later became Tata Sky). When Jaya TV announced a discussion on this topic the Marans’ cable network in Tamil Nadu blacked it out! Jaya TV then featured the blackout as a news item later in the evening! 

In July 2011 the chickens began to come  home to roost when the CBI  said it had enough evidence on how Dayanidhi Maran had used his office to help his family's media empire. This was the Aircel Maxis case, one of the three being cited as the criminal investigations responsible for the current action. Maran had to resign as minister. He was accused of arm-twisting C Sivasankaran, the owner of Aircel, a mobile company, to sell his stake to the owner of a Malaysian company, Maxis, who in turn invested in Kalanithi Maran’s Sun Direct. 

The brothers had been tirelessly creative in leveraging opportunity their political clout brought. But overreach can be counter productive, to put it mildly. They were charge sheeted by the CBI in August last year in this case and the Enforcement Directorate is reported to have attached properties of the brothers worth about Rs 722.48 crore.

Meanwhile in Tamil Nadu Kal Cables which was the market leader and controlled  more than 60 per cent of cable operation business in Chennai, began facing trouble from the Chennai Corporation. which has already started removing the cables for non-payment of track rent to the corporation. The rent, which was mere Rs 9,500 per km per year, was increased to Rs 32,450 per km per year after Jayalalitha’s party came to power.

For the first time in the 22 years of this media conglomerate’s existence their political alignment with governments at both the Centre and State is truly adverse. But between the courts and their demonstrated entrepreneurial ingenuity,  the Marans may fight back yet.

And as for the NDA government, does it really want to be seen shutting down a major TV network through executive action?

 

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