, the job portal and job fairs business from HT Media group company FireFly e-Ventures will be merged back into HT Media. According to details filed by HT Media (download pdf), Firefly e-Ventures shareholders will receive two equity shares of HT Media of Rs. 2 value for every 31 equity shares of Firefly e-Ventures of Rs. 10 each fully paid up. FireFly e-Ventures, on June 11, 2007, is a subsidiary of HT Digital Media Holdings Ltd, which is a subsidiary of HT Media Ltd.

Note that this doesn’t mean that Firefly e-Ventures will become a shell company: it will still contain two businesses –, which has become a movie reviews site, and HTCampus, an education information based lead generation portal. HT Media has spoken about plans to launch real estate portal in the past, and according to the spokesperson, new businesses will be launched with Firefly. From what we’ve heard, most of cost and revenue of Firefly e-Ventures is from, so it will be interesting if HT Media begins reporting numbers for Firefly without Shine.

This is the second recent instance of an online business being merged with its parent traditional media business: as we had reported last week, Web18 will be merged with Network18.

Changes And Claimed Benefits Of The Merger

An HT Media investors relations executive told MediaNama that there are unlikely to be many significant operational changes because of the merger – there will be unification and alignment of sales force of with that of HT Media. In Q2-FY11, HT Media’s Internet business reported an EBIT loss of Rs.9.5 crore on revenues of Rs. 2.7 crore, compared to an EBIT loss of Rs. 10 Crore for the corresponding quarter the previous year (Q211 Concall pdf).

According to a filing by HT Media, the rationale is that is a loss making entity, and looks like it will continue to make losses in the near term: it will continue to be in need of funds to finance its losses/expenses; there has been substantial erosion of the share capital/net worth of Firefly e-Ventures, and continued losses for the Job portal business may result in further erosion of share capital/net worth of the company. Additionally:

– Tax Benefits: The spokesperson said that there will be tax benefit for HT Media, as it will take on board the accumulated losses incurred by the Job portal business.
– Bundling Of Inventory: The proposed demerger will allow advertisers attractively bundled advertising options in print, Job Portal and FM radio, and on the other hand enable HT Media to garner a larger share of advertising spend and offer operational synergies.
– Employees For Attracting and retaining employees in HT Media would be easy, as compared to (FireFly), which has been incurring losses since inception.
– Different Business from DesiMartini & HT Media believes that the “business of operating social networking and education websites have the potential of generating profits. They are at a stage wherein they require focused management attention. Moreover the nature of risk and return involved in these businesses are distinct from the that of the Job Portal Undertaking”
– Synergy with and HT Media is already running and “Therefore, Resulting Company my leverage its experience of running Internet portal operations alongwith technical and sales manpower to increase the business prospects of job portal

Our Take

This is more about taking the losses of on board at HT Media. If and could benefit Firefly e-Ventures, it could have been done without the merger. Similarly, the only benefit from an employment perspective is the leveraging of the HT Media salesforce for selling and bunding of inventory, though we don’t see why HT Media couldn’t have done it without having to merge.

Also, HT Campus is not very different from when it comes to its affinity with HT Media’s print business. Ditto for any real estate portal they may launch in the future. HT Media might as well have also acquired HT Campus and, and be done with it.

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