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FIPB okays Walt Disney proposal to set up wholly owned subsidiary

30-January-2002
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FIPB okays Walt Disney proposal to set up wholly owned subsidiary

Foreign Investment Promotion Board (FIPB) has allowed Walt Disney to set up a wholly-owned subsidiary for the launch of the Walt Disney channel. Though the FIPB has cleared the proposal, the final go-ahead from the Commerce and Industry Ministry is still awaited.

Currently, Walt Disney is the minority partner in WD India, while the majority 51 per cent stake is held by the K.K. Modi group with management control.

According to the approval conditions laid down by the FIPB, the new wholly-owned subsidiary will not be permitted to undertake activities that are already being undertaken by the joint venture company.

This leaves Walt Disney with very limited alternatives. It has to restrict its operations only to channel launching and will not be able to develop and market products using the Walt Disney characters, concepts, ideas, cassettes, toys, education help and video products.

The new subsidiary has also been barred from undertaking distribution of television rights and purchase and sale of commercial air time.

Walt Disney Company (India) - the subsidiary – plans to invest Rs 141 crore over a five-year period. It plans to involve itself in the development of children's entertainment genre among Indian companies, use TV to encourage creativity among children. Produce localised content and dub programmes in Hindi and other regional languages and provide direct business opportunities for local companies and agencies to work with Disney in creative content development, marketing and distribution.

Source: Business Line

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