Business Today

Would Scrooge approve?

The tale of Ronnie Screwvala’s UTV is almost as fantastic as some of the blockbuster Bollywood productions that have come out of this media & entertainment house.

Print Edition: March 9, 2008

Ronnie Screwvala
Ronnie Screwvala
Unlike a few of those productions, however, the UTV success saga is as real as it gets. Last fortnight, the UTV story got even headier (and even more real); a regional subsidiary of The Walt Disney Company upped its stake in Screwvala’s company from 13.7 per cent to 32.1 per cent, shelling out Rs 805 crore in the bargain. At the same time, the Disney arm will also invest with UTV in UTV Global Broadcasting (UGBL), the parent company of Genx Entertainment and UTV Entertainment Television in which UTV has bought 75 per cent of the equity for Rs 240 crore. Disney will buy 15 per cent, worth Rs 119 crore, in UGBL (the remaining 10 per cent will be held by Screwvala’s promoter group). Together with warrants worth Rs 390 crore, which will be issued to Screwvala’s promoter group to enable his stake to also stand at 32.1 per cent, the total investment of Disney in the UTV Group stands at Rs 1,314 crore.

“This investment in the UTV Group is The Walt Disney Company’s commitment to international growth. This investment complements our fast-growing Disney-branded businesses and long-held joint venture in ESPN Star Sports,” says Andy Bird, Chairman, Walt Disney International, and a board member of UTV. “UTV has strong local brands and media properties that provide complementary growth platforms to Disney’s existing branded efforts in India,” adds Bird. Points out Screwvala, the founder- promoter and group CEO, UTV: “The partnership is across movies, TV content, interactive and broadcasting, and endorses our leadership position in India and South-East Asia and further help in our global growth strategies.”

Screwvala would have few complaints with the valuation at which Disney picked up the shares—analysts point out that the Disney subsidiary has bought the additional stake at Rs 1,030 per share, some 30 per cent more than the market price prevailing at the time of the deal. Yet, if punters were unhappy—which is why the stock plummeted 4 per cent (closed the day at Rs 828.2) on the day the deal was announced—it was because of the open offer price of Rs 860 to minority shareholders.

“The market was expecting a price of Rs 1,000,” shrugs a senior analyst from an Indian equity research firm. Investors may have not got the price they wanted, but Screwvala sure seems to have hit pay dirt.

Anusha Subramanian

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