Disney offers to buy the rest of Indian media firm UTV
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Walt Disney Co. has made a $454-million offer to acquire Mumbai media company UTV Software Communications Ltd. as it seeks to capitalize on the rapidly growing yet fiercely competitive Indian market.
Disney offered about $22.68 (1,000 rupees) a share to buy the remaining 49.6% stake it does not already own in UTV, a firm that started out in television production but has expanded into movies, games and other forms of interactive content. Among its claims to fame, UTV says it launched India’s first daily soap opera, “Shanti,” in 1995.
In a statement, Disney said it took the first step Monday in delisting UTV from the Bombay Stock Exchange. Delisting a public company in India is a long process that is subject not only to regulatory approvals but also a vote of shareholders, “all of which can take several months or more to complete,” the company said.
If the move is successful, UTV’s chief executive, Rohinton “Ronnie” Screwvala, will sell his shares to Disney and become the media conglomerate’s head of operations in India. Mahesh Samat, who currently manages Disney’s assets in India, will become chief operating officer, reporting to Screwvala, according to the statement.
Although UTV has been associated with successful Bollywood film projects, Screwvala has extolled the media opportunities presented by new platforms, such as mobile phones and high-speed wireless networks. Screwvala wrote that compared with the meager $2.26 monthly fee Indians pay, on average, for access to 400 cable channels, they’ll pay a comparatively rich 68 cents for a single mobile phone ringtone.
“The medium is a cracker we are used to paying for since Day One, and the payment mechanism is well-established,” wrote Screwvala, adding that mobile “offers an excellent opportunity for subscription revenue, rather than just being dependent on advertisers.”
Disney originally invested in UTV five years ago, spending $44.5 million for a 15% stake. It subsequently increased its holdings to 50.4%.
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