Network18’s Q4 Results Raise Tax and Business Structure Questions
Network18 Media & Investments Ltd reported a consolidated loss of ₹29.09 crore in Q4, FY2024–25. The revenue from operations stood at ₹561.32 crore, but comparisons with the previous year are inapplicable due to the Viacom18–Star India merger.
This case isn’t just a media business update—it raises broader questions about mergers, tax structuring, and compliance strategy.
📌 Summary
Network18 posted a ₹29.09 crore net loss in Q4 FY2025 despite ₹561.32 crore in revenue. This highlights rising content costs, shifting ad dynamics, and tax implications for media houses under the Indian Income Tax Act.
What Tax Consultants Should Note
Here’s how tax professionals and small businesses can extract key learnings from this:
📌 Merger Impact on Tax Reporting
- Comparability of results gets distorted in the year of merger.
- Consolidated financials post-merger can’t be directly mapped to previous years—this has implications for audit, investor analysis, and tax provisions.
- The merged entity may reassess MAT credit, carry-forward losses, or deferred tax assets under Section 72A of the Income-tax Act, 1961.
📌 Amortisation & Goodwill: Key Issues
- M&A often results in accounting goodwill. However, Finance Act, 2021 amended Section 32 to disallow depreciation on goodwill, impacting tax shields.
- Businesses merging or acquiring should rethink valuation and structuring accordingly.
How Media Giants Use Tax Structuring
- Large companies use group consolidation to streamline operations and claim benefits under Indian Accounting Standards (Ind AS).
- Cross-holding structures and internal IP monetisation often emerge post-merger. These must be carefully analysed for transfer pricing under Section 92.
“Always review merger transactions under both Companies Act (Section 230–232) and Income-tax Act (Section 72A, 47, 2(1B)) to ensure tax-neutrality and carry-forward benefits,” says a tax expert from the Efiletax panel.
Network18 – Key Tax Implications
| Parameter | Implication |
|---|---|
| Merger with Star India | Business restructuring, change in control |
| Q4 Loss (₹29.09 Cr) | Potential carry-forward under Section 72 |
| No goodwill depreciation | Post-2021 change under Section 32 |
| MAT/Deferred Tax Assets | Likely reassessment in merger year |
| Revenue (₹561.32 Cr) | New topline post-consolidation, impacts GST turnover base |
Regulatory Backing
- Income Tax Act, 1961: Sections 32, 72, 47, 2(1B)
- Companies Act, 2013: Sections 230–232 (Amalgamation framework)
- Ind AS 103: For business combinations
- CBDT Circular No. 5/2014: On tax treatment of business reorganisation
Final Thoughts
Mergers like Viacom18-Star India reshape not just media narratives, but also accounting and tax strategies. Small businesses planning a merger or acquisition must consult experts early to optimise tax planning and ensure compliance.