Walt Disney has bought 15% in UTV Global Broadcasting for USD 30 million। Its stake increases to 32।1% in UTV with an investment of about Rs 805 crore. Ronnie Screwvala, Chairman of UTV and Andy Bird, President of Walt Disney International, speak to CNBC-TV18 about this development।

Screwvala said the broadcasting business is valued at Rs 800 crore post the Disney stake buy. The open offer price is at Rs 860.

He said the promoters are investing Rs 390 crore via 4.5 million shares through warrants. The total investment is at Rs 1,330 crore. Rs 400 crore of the funds raised will be used for broadcasting business.

UTV will launch its business channel in March.

Excerpts from CNBC-TV18’s exclusive interview with Ronnie Screwvala:

Q: The deal, which the market was sensing, has finally come through. You have raised about Rs 800 crore via this additional stake. What is the game plan with Walt Disney now, holding about 32% with the company?

A: We have a very strong joint venture with Disney. We have already had that for the last one-year. When were looking at expanding the overall base for our verticals, it was natural for us to look at an existing partnership. Walt Disney will invest about Rs 800 crore in the parent company, UTV. It will also invest about Rs 120 crore for a 15% stake in the broadcasting entity. Thus valuing the broadcasting subsidiary at about Rs 800 crore. I as a promoter group will also be putting in about Rs 390 crore, in terms of warrants of about 4.5 million shares. At the end of this, both of us will have 32.1% each on a fully diluted basis.

Q: How do you plan to deploy this Rs 800 crore that you have bagged?

A: The overall deal transaction is Rs 1,330 crore. So, it is pertinent to note that the cash inflow is Rs 1,310 crore. Of this, broadcasting will take above Rs 400 crore. Our interactive movie business will have its fair share. We will be charting out our significant growth and other M&A plans as we go forward. At this stage, I am not in a position to articulate a full deployment of resources of the Rs 1,300 crore.

Q: Are you adequately funded for now because the initial capex that you laid out was in excess of about Rs 800 crore for the channel business?

A: At the moment, we are looking at four channels, three of which have already been launched ‑- Bindass, Bindass Movies and World Movies. The Hindi movie channel will be launched by the end of this month. We have the resources to augment that as we think necessary and as plans unfold for additional channels. But presently this is what it is.

Q: The open offer price is about Rs 860 per share. Is Walt Disney keen on enhancing their stake from the current 32% to in excess of 50%?

A: The open offer price is Rs 860, which represents a 5% premium based on the last 14 day’s trading average. This is as per Sebi’s formulae and norms. Walt Disney cannot go above 32.1% for four years, as there is a cap. If there are shares in the open offer, the promoter group, which is myself, has the option to buy back all the shares from the Disney Company.

Q: What else does this deal bring to the table for you, considering they have a very strong franchisee network in the US? Would you at any point be open to utilize that as well?

A: In the last two years, we have grown a global story quite well, as we evolved UTV from B2B to a B2C company. In terms of motion pictures, this year we will be the largest movie studio out of India if one looks at the Manoj Night Shyamalan movie that is releasing in June. In gaming, our entire geography is the world. In animation, our geography is the entire world. If one looks at a combination of those two, it makes imminent sense for us to look at the partnership with Disney on a growing basis, because they a larger presence in these spaces that we are in. It is important for us to be able to look at and synergize as those will be the natural outcome.

Q: Would you be looking at any kind of a joint venture even for your motion pictures business because they have a stable play there as well?

A: Disney’s entry is into the parent company, so it obliviously encompasses their interest in motion pictures, gaming, animation, television, and broadcasting.

Q: Could you also throw more light on the structure because the investment in the broadcast arm really encompasses the general entertainment channels? You are also looking at launching a business news channel, how does that fit into the business structure?

A: UTV, the parent holding company, owns 77% of its motion picture business, which is listed on the London Stock Exchange. It holds 75% in broadcasting. Of the balance 25%, 15% is being held by Walt Disney Company while the 10% is held by the promoter group. It holds 100% in its entire interactive business, which includes investments into Ignition and India Games. The news channel is going to be one where the board will look at and examine a 20% shareholding from UTV’s perspective and 80% will be held by me. The English business news channel, which is the last of our five channels, is launching, launching in March this year.

Q: What has been the response to your latest release Jodha-Akbar since there has been some contentions in terms of exhibiting through multiplexes?

A: Overseas, it is heading to be one of the top two blockbusters of all-times, in terms of releases. In the US, we have had record opening for Jodha-Akbar. It is a similar story in Dubai, UK, and many other places. It made close to Rs 55-60 crore in the opening week in India and this is without us being able to release in Rajasthan. We hope that at some stage we will be able to have active discussions. The movie does not hurt anyone’s sentiments. That is not our approach. We do not wish to hurt anyone’s sentiment at all. We will resolve some of the pending issues as far as that go.