Utv: Indian Broadcasting Company

UTV

The aim of UTV, according to its CEO Screwvala, is to increase the scale of operations in foreign markets and to have revenues for US$ 200 billion by 2010. Obviously it entails a huge amount of investment and so Screwvala starts bargaining with Disney. The market research shows as, for Indian-M&E companies, expanding interest also in foreign markets represent a great opportunity thanks to the presence of a large non-resident Indian population base. Furthermore it shows that the film entertainment was one of the fastest-growing industries because it was the primary source of content for television. Disney could provide to UTV their global media and synergy expertise and their ability in developing and distributing movies content worldwide. Hence the alliance with Disney could be the right mean also to accomplish the findings of the market research.

As we have just said there are a lot of advantages in a strategic alliance with Disney, especially considering what UTV believes: growth will be generated by movies, animation, international opportunities and M&A. Moreover UTV wants to keep its movie-business production-led and it’s not so interested to distribute movies produced by third parties. Disney has an experience of a 75-year-old company and it has developed businesses across the world. Disney, through its experience, could give a hand to UTV in decreasing the cost of production and distribution of movies, given that the gap between revenues and cost came down during 2003 to 2006. Furthermore Disney is also very skilled in marketing functions that are increasingly playing an important role in the success of a movie.

An alliance with Disney doesn’t have only positive aspects but obviously also some negative ones. For example the proposal of Disney includes, in addition to buy some UTV stocks, the purchase of Hungama TV, a channel meant for children launched by UTV in 2004. Hungama TV, within 20 months of its launch, became the number 1 channel in the...