Acquisitions

News Corp sells its Entire Stake in Mosaic Media due to New Restrictive FDI rules

Please note that this news article was updated on 3oth July, 2020. This article was originally published on 29th July 2020.

Global media giant News Corp has sold its stake in digital business news platform Mosaic Media to media conglomerate Hindustan Times Media or HT Media for INR 6 crore. The American media giant has reportedly sold its entire stake in the Noida based news company.

Logo of business news digital platform VCCircle.com

According to the regulatory filings, HT Media will invest INR 6 crore in Mosaic Media Ventures (parent company of VCC Circle) and will pay additional 1 core on deferred basis and the same will be linked to the ‘revenue milestone payment.’

Following this investment, Delhi based HT Media will get to own all the digital properties of Mosaic Media including VCCircle.com, Techcircle.in, VCCEdge and SalesEdge. Additionally, the Noida headquartered company also owns training and event unit called VCCircle Training, which will now be duly controlled by HT Media.

News Corp’s decision to sell its entire stake in Mosaic Media is said to have been triggered by Indian government’s new FDI rules in digital platform. Drafted last year, the new FDI rule permits foreign entities to own only 26% or less stake in the Indian digital media companies. Although many termed this rule highly regressive but same restrictive FDI rules also exist for print as well as broadcasting media.

News Corp had acquired Mosaic Media in 2015 to marks its increasing investment in India’s digital space. News Corp’s acquisition of Mosaic Media also paved way for the American company to enter India’s digital news industry.  Before this investment, the global media giant had invested $30 Mn in real estate startup ProTiger and also bought stake in financial planning website Bigdecisions.com.

Experts claim that News Corp’s stake sale in Mosaic Media is a first big M&A event post new FDI rules and added that more mergers & acquisition are likely to happen in coming months in India’s digital news industry.

Sources privy to the matter claim that News Corp always like to have ownership stake in the news platforms and hence it decided not to maintain any minority stake in the Mosaic Media.

As for Hindustan Times, Mosaic’s successful digital properties like VCCircle and Techcircle gives the company an opportunity to further increase its dominance in the digital news space. The company already owns quite a few popular digital properties like Livemint.com. Interestingly, many years back VCCircle and Livemint had struck content partnership deal and hence smooth synergy between these platforms should not be a problem.

This, by the way, is a second big investment in the digital news space in last one month. Barely a few weeks ago, well-known industrialist RP Sanjiv Goenka acquired 51% stake in AI powered digital platform Ediortji.  Valued at approximately $10 Mn, Ediortji is founded by Ex NDTV anchor Vikram Chandra.

Was Mosaic Media’s sale out a distressed sale

The new FDI rules have been officially cited as the main reason for News Corp selling Mosaic Media. However, unconfirmed reports including the buzz on social media claim that the American media company was unhappy with Mosaic’s performance. Industry experts claim that Mosaic’s best known brand ‘VCCircle’ had stop growing partially owing to increasing competition in the digital news space.

Adding credence to this fact are financial numbers that don’t look very favorable. According to reports, Mosaic Media in Fy15 (the same year it was acquired by News Corp) reported an operating revenue of 13.2 crore and a loss of Rs 5.4 crore. Flash forward to 2019 and these numbers don’t look any better, with the company reporting operating revenue of Rs 14 crore and a loss of 15.8 crore.

These unimpressive numbers are proving to be sufficient for many analysts to claim that News Corp has virtually dumped the Mosaic Media problem on HT Media. As for HT Media, it should be satisfied with the fact that it has bought a loss laden yet promising platform at a peanut price.

This acquisition by the way might pave way for News Corp taking some sort of stake in HT Media in the future. Two companies are already under the collaborative mode, after earlier this year Mint and News Corp’s Wall Street Journal collaborated together to launch a bundled subscription offer.

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