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MUMBAI:
UTV Software Communications will put in $10 million (Rs 400
million) and have a 20 per cent stake in the upcoming business
news channel, pegging its initial valuation at Rs 2 billion.
UTVi
has an investment plan of Rs 1.20 billion in the first year
and its peak funding requirement will be Rs 1.6-1.8 billion,
UTV CEO Ronnie Screwvala tells Indiantelevision.com.
UTVi
will have space to dilute six per cent stake to a foreign
investor. The regulation for news channels uplinking from
India allows a cap of 26 per cent in foreign holding. UTV
Software Communications' holding of 20 per cent will be counted
as foreign equity.
"It
looks highly unlikely that UTV will get a foreign strategic
investor in the business news channel. With only six per cent
left, that possibility looks remote," says a market watcher.
As
The Walt Disney Company is taking a 32.1 per cent stake in
UTV Software Communications, its holding in the business news
channel will be 6.5 per cent. Will that mean that ABC Network
will come in? Screwvala dismisses such speculations.
"The
business news channel will get funding from UTV Software Communications
and the promoter group. We are not in talks for investors
at this stage. We will build the value in the business,"
says Screwvala.
For
the non-news broadcasting business the peak funding requirement
will be Rs 5 billion. "The Hindi movie channel will require
about Rs 2.5 billion while the World Movies channel will need
Rs 500 million. The two Bindass channels will require about
Rs 2 billion," Screwvala elaborates.
The
investment towards the non-news broadcasting business has
so far been Rs 1 billion. UTV has already launched the Bindass
channels and World Movies. The Hindi movie channel will be
launched soon.
UTV
has a debt of around $45 million (Rs 1.8 billion) and plans
to retire it after getting a capital infusion of Rs 13.14
billion due to the deal with Disney. This combines Disney's
investments in UTV and UTV Global Broadcasting Ltd (UGBL),
together with the warrants to be issued by Screwvala's promoter
group of Rs 3.9 billion.
As
reported first in Indiantelevision.com, Disney is investing
Rs 8.05 billion in UTV Software Communications to lift its
stake to 32.1 per cent and Rs 1.19 billion in UGBL for a 15
per cent stake. Disney had earlier taken a 14.9 per cent stake
in UTV Software Communications.
UTV
expects to post a turnover of Rs 4 billion in the current
fiscal, with movies contributing Rs 2.2 billion, TV Rs 1 billion
and gaming and interactivity Rs 800 million.
Also
Read:-
Walt
Disney to up stake in UTV to 32%, invest Rs 9.2 billion in
full deal
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