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Walt Disney buys out Hungama TV, also takes 15 pc stake in UTV Software Communications

26-July-2006
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Walt Disney buys out Hungama TV, also takes 15 pc stake in UTV Software Communications

Speculation has been rife for a while now, but the official word on Walt Disney’s talks with UTV Software and Hungama TV is now out. The kids’ major is not just buying a stake in Hungama TV (United Home Entertainment Ltd) but, in fact, is buying a 100 per cent stake in the company.

In addition, Walt Disney India is also taking a 14.9 per cent equity stake in the expanded capital of UTV Software Communications. Walt Disney officials, who reiterate that both developments are subject to regulatory and statutory approvals, made these announcements on July 25, 2006.

This acquisition will integrate Hungama TV in the Walt Disney India portfolio, which at present comprises Disney Channel and Toon Disney. However, both acquisitions are subject to regulatory approval. Consequently, even as an agreement has been signed, the deal will really see closure by October 2006. Until then, it is business as usual for the two entities.

While Hungama TV’s acquisition has taken place at an enterprise valuation of $30.5 million, the stake in UTV is for a consideration of $14 million.

The integration plans of the two bodies haven’t been crystallised as yet. However, some details that can be expected include Zarina Mehta, currently Chief Operating Officer of Hungama TV, working with the Disney team as a Consultant to oversee the organisational and operational integration of Hungama TV into Disney's portfolio of kids’ channels.

At present, no other change has been outlined in terms of whether there would be a name change to bring in the Disney brand name, whether the teams would see structural change to conform to the kind of structures that Disney has in various functions of content, marketing and so on. Disney officials pointed out that there is still time before it is seen what this integration manifests.

Andy Bird, President, Walt Disney International, said, “India is a very important market for us and this is a strategic move we have taken to strengthen our position in this market.”

“Not only will we be acquiring a great channel asset, The Walt Disney Company will also be able to participate in UTV's diversified media businesses and bring to UTV our global media and synergy expertise, including developing and distributing high quality family friendly content, in nearly 200 countries worldwide and expanding related franchises across film, television, music, merchandise, new media and live entertainment,” added Bird.

Rich Ross, President, Disney Channel Worldwide, added, “With Hungama TV becoming a part of the Disney portfolio, our offering has become complete for the India market. Television is and will continue to be the major growth engine in building franchise affinity in India. Integrating Hungama TV into The Walt Disney Company's existing India channel portfolio of Disney Channel, and Toon Disney/Jetix, will allow Disney to fortify its already strong presence in India's children's television market.”

“Hungama TV has proved to be a major success story for us in just 22 months of its launch in the seven-channel kids space. It has established and re-emphasised our core-competence in creating kids content. We are proud to announce that, in addition to the strategic investment by Disney, we have divested our entire stake in United Home Entertainment Ltd (Hungama TV) to Disney, thus letting our home-grown local kids channel enter its next stage of growth with increased international exposure. The company hopes to still be part of this venture through provision of local content on a continued basis,” said Ronnie Screwvala, Chairman & CEO, UTV Software Communications Ltd.

Meanwhile, UTV on Tuesday reported its results for the quarter ended June 30, 2006. Consolidated revenue of the company for the quarter is Rs 523 million, as compared to Rs 488 million last year during the same quarter, up 7 per cent. Net profit for the quarter under consideration is Rs 34 million. The company has consolidated the financials of UESL, UTV-US, UTV-UK and UTV-Mauritius.

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