Does Disney Hold A Majority Stake In UTV After The Open Offer?

Disney and UTV Group promoter Ronnie Screwvala have an open offer for the BSE listed UTV Software Communications, a media company with investments in Films, Television, New Media, Music and Gaming. Via an open offer which closed October 27th 2008, Disney and entities controlled by UTV promoter Rohinton (Ronnie) Screwvala picked up 22.65% in the company at a price of Rs. 860.79 per share, which amounts to a total acquisition price of Rs. 666.72 crores. The share price has plummeted from around Rs. 780 at the beginning of October, to around Rs. 227. The deal gives the two a combined shareholding of 83.25%, with the public shareholding in the company down to 16.75%.

What is not clear, is the split between UTV and Disney. Some reports have pegged Disney’s stake at more than 50% - hence a majority stake. However, a UTV spokesperson had told me in February that the Open Offer is a means for Disney to acquire 32.1% stake in UTV, and no more.

A recent email sent out by Screwvala suggests the same: “In the Shareholders’ Agreement between me and Disney it is clearly articulated that for a period of 4 years from the date of completion of the Open Offer, Disney Shareholding will not exceed 32.1%, nor will Disney exercise voting rights in excess of 32.1%.”

This suggests that Disney has acquired the option of increasing its stake after four years. (Update) According to a BSE filing before the Open offer, Disney owned 37.29% in the company.

We’re awaiting further inputs from UTV on the shareholding of UTV Software Communications Ltd.

Remember that this deal has to be such that Disneys shareholding in UTV Global Broadcasting Ltd, of which UTVs news channels are a part, does not exceed 26%, which is the FDI (Foreign Direct Investment) limit for news companies. Earlier this year, Disney had also picked up around 15% stake in UTV Global Broadcasting Ltd.

Screwvala and the promoter group entities - Unilazer Exports and Management Consultants Ltd, Unilazer (Hong Kong) Ltd also the right to acquire all the shares tendered in the open offer back from Disney.

Related:

– Q2-09: UTV Invests Rs. 256.39 Crores In Gaming; EBITDA Losses; Increases Stake In ITNation, IndiaGames

Q2-09: UTV Invests Rs. 256.39 Crores In Gaming; EBITDA Losses; Increases Stake In ITNation, IndiaGames

For the quarter ended September 30th 2008, UTV net profit grew to Rs. 32.8 crores, up from Rs. 17.6 crores for the same quarter last year, while Operating Revenues grew to Rs 170.8 crores from Rs 71.9 crores for the same quarter last year.

Note: The year on year comparison isn’t valid since UTV has revenues from its acquisitions during the last fiscal, including those from True Games for September 10th to 30th 2008. The company structure has been rather fluid as well. As an example, the True Games acquisition is via a subsidiary we haven’t heard mentioned before, called UTV Games.

It’s interesting to note that despite investments in TV, New Media and Interactive (Gaming), Movies continues to be the largest contributor to revenues. During the quarter, Disney also infused Rs. 1.18 billion into UTVs broadcasting business. A look at their Interactive and New Media segments:

Interactive

The Interactive segment reported revenues of Rs. 21.55 crores for the quarter, and contributed around 14 percent to UTVs operating revenues. However, as was the case last quarter, the Interactive segment continued to make a loss at the EBITDA level - of Rs. 2.77 crores, and a staggering increase in investment at Rs. 256.39 crores.

Last quarter, the company had invested Rs. 133.79 crores in the Interactive segment. UTV Interactive consists of Ignition Entertainment (console gaming), True Games (Massively Multiplayer Online Games) and Indiagames (Mobile Games, Broadband based PC Games distribution).

Indiagames
During the quarter, IG Interactive Entertainment Ltd, a subsidiary of UTV acquired an additional 3.78 % equity stake in Indiagames. Indiagames appears to have had an excellent quarter - UTV Chairman and CEO Ronnie Screwvala has said that Indiagames has witnessed consistent QoQ growth, with a year-on-year increase of 150% growth in revenues.
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Telecom Operators Outsource Game Deck Management…Finally

Update: An clarification from Real Networks. We’re told that Indiagames is adivising them on game deck management as a significant content provider, and not managing the network itself. The error is regretted:

“We take this opportunity to  refer to your article in “MediaNama regarding Management of Game section in Airtel Live Portal. Please note that RealNetworks has been managing the Airtel Live portal since almost three years now and currently have a contract dated February 29^th 2008 with Airtel to manage the entire Airtel Live portal against certain revenue share. Indiagames is one of the content providers who are providing gaming contents, like over 50 CPs who are providing the contents to various sections/categories in Airtel Live WAP portal. The actual content placement and management is done by our team based in Gurgaon. This is an expert area and RealNetworks has many global references where we have similar arrangement with operators (refer attached list). RealNetworks is a global leader in digital entertainment including mobile VAS and has many patent related to mobile VAS.”

Original story:

Indiagames is managing the Airtel Live game deck
Another indication of the trend that Indian mobile operators are loosening their hold over mobile data services: MediaNama has learned from reliable, industry sources that UTV owned Indiagames has been managing Airtel’s game deck for the last 3 months. We’re also told that gaming has become the largest contributor to revenues from the on-deck portal Airtel Live. However, it’s important to note that Caller RingBack Tones (CRBTs) are not a part of Airtel Live.

A “game deck” is essentially the catalogue of games that are displayed to the consumer on a WAP portal. Consumers tend not to dig too deep when accessing game decks, so deck management - choosing which games to display on the first few pages, is key to sales.

We contacted Samir Bangara, COO of Indiagames, who declined to confirm or deny the news, saying only that “Airtel is a key account for Indiagames, and we continue to find various ways of working strategically with them”. We’re also awaiting a response from Airtel.

Indiagames is both a games publisher and a distributor in India, so there could be a conflict of interest there, particularly when other game publishers are involved. Last year, at a NASSCOM Animation and Gaming panel on mobile gaming that I had moderated, Bangara had mentioned that Indiagames is working on a Games On Demand (subscription) service for the mobile. That hasn’t been launched yet, and I wonder if this is a precursor to the launch of that service.

End2End Mobile To Manage Vodafone India’s Game Deck?
We’ve also learned that End2End Mobile will be managing the game deck for Vodafone in India. End2End, rather MACH India, is operating out of Hyderabad and Bangalore. The service isn’t live yet. We’ve written to them, and are awaiting a response. According to their website, End2End Content Services “specialises in running content retail portals for mobile operators, portals and content providers.” Vodafone is one of their more significant customers, with deals in New Zealand, Turkey and Egypt.

What about RCOM?
All said and done, it’s good to see operators outsourcing their game deck management - something, for which they had been criticized, though not openly, by gaming companies. Games aren’t exactly ringtones and ringback tones, which enjoy marketing support, and gaming companies will invariably have a better understanding of gameplay, and which games work, and which don’t. At the same time, there’s a risk that if a publisher manages a game deck, he might push his own games.

At the same NASSCOM conference, Krishna Durbha, Head VAS, Business & Marketing for RCOM had invited gaming companies to manage RCOM game decks…I wonder if any gaming companies approached KD regarding the game deck management, and whether he followed through…

UTV Owned Techtree Gets Overhauled; Tech2 Needs To Rethink Ads; SEM-Sales Margin Game?

Well, this was on the cards: Techtree has become the first of the IT Nation properties to be overhauled, post the acquisition by UTV. And it’s not surprising either - TechTree has a tech and gadgets show UTVs business channel UTVi, and it was never a good idea to send viewers to a stone-age site. While the content in the new site appears to be the same, its positioning is significantly different. Take a look at the older version (here) and the revamped site.

The interactive elements - Forums, Ask Techtree, E-Classifieds, Comments and Contests are separated from other categories on top; the opinions segment has also been given a prominent position on the right, and its good to see that they’ve retained the recent comments section from the front page…. Their Price Search has also come out of beta. Apart from that, there are no new sections of note, but the content discovery and usability has been improved.

Tech2 And Ads

TechTree competes head-on with Web18s Tech2.com, both on the web at TV. I just checked out Tech2, and I think it’s obscene what they’ve done with the site, with permanent Nokia E-Series background. Just because it’s possible to put a product as the site background doesn’t mean you do it - I wonder if the editors have any say in this. Then again, if they’re just getting in traffic using Search Engine Marketing, and selling ad space to advertisers based on those numbers, reader loyalty doesn’t really matter.

UTV had completed the acquisition of a 76 percent stake in IT Nation for Rs. 15 crores earlier this year. They’d announced plans to invest Rs. 120 crores in the digital space over the next two years.

Disclosure: I own an inconsequential number of shares of Network18

UTV Acquires 80 Percent Stake In MMO Publisher True Games Interactive

This just in: BSE listed UTV has entered into an agreement to acquire 80 percent stake in True Games Interactive, an Orange County, California based online gaming startup. The stake is being acquired via IG Interactive Entertainment, a 100 percent subsidiary of UTV, but the amount being paid for the acquisition has not been disclosed. True Games intends to release their first game in the beginning of 2009.

With this acquisition, UTV now has investments in two gaming companies that operate in a hit-or-miss environment: Ignition Entertainment (Console Games), and True Games (Massively Multiplayer Online Games). Much like the movie business, quite a lot of money and time is required to develop such games; it’s not a quarter-on-quarter play. If the game succeeds, expect recurring revenues as a franchise gets established. If it fails…

Recent announcements from True Games reveal that the company has partnered with games developer Petroglyph to publish a free-to-play game for the PC. Petroglyph has published games like Star Wars: Empire At War and Universe at War series. In May, they tied up with Live Gamer for a marketplace for player-to-player trading of virtual items. A free-to-play game essentially makes money via buying and selling of virtual items and advertising.

True Games was founded in January 2008 by two industry execs from Massively Multiplayer Online Games publisher K2 Networks - Jeff Lujan and Bob Drobish. Lujan was SVP of Global Publishing at K2, while Drobish was responsible for overall company revenue, Live Game Operations, Technology & Infrastructure, Customer Support, and India Operations.

Related:
– UTV Gaming Revenues At $3.45 M; Plans $75 M Gaming Investments; Fund US Startup, Acquire Mobile Games Aggregator
– UTV Softwares Gaming Arm To Raise Funds? UTV Launches Content On IPTV In Japan, Australia & NZ

UTV Softwares Gaming Arm To Raise Funds? UTV Launches Content On IPTV In Japan, Australia & NZ

Gaming: UTV Board Approves Acquisition of Potters Stake In Ignition Entertainment
IG Interactive Entertainment, the wholly owned subsidiary of BSE listed UTV Software Communications plans to increase their stake in Ignition Entertainment. UTVs board has approved the acquisition of the stake owned in Ignition by the Potters, who had initially funded the console gaming company. Note that the stake hasn’t been acquired yet, and UTV Software has declined to share any details with MediaNama.

According to our sources, IG Interactive Entertainment is the holding company for Ignition Entertainment and Indiagames. This acquisition of stake is an act of consolidation: with the Potters having exited, UTV Software and the promoters of UTV will hold equity in Ignition via IG Interactive. This will give IG Interactive the opportunity to raise further capital, with the Potters not involved.

Interestingly, IG Interactive essentially has a gaming presence across segments - in console gaming, with a bulk of Ignition Entertainment, and Mobile and broadband gaming through Indiagames. However, there is little or no clarity on the structuring of UTV companies - there’s UTV Software, UTV New Media, UTV Global Broadcasting, BIndass, Indiagames, Ignition Entertainment and UTV News, among others. Note that Disney has a 32 percent stake in UTV Software.

IPTV: World On-Demand Launch in Japan, Australia and New Zealand
UTV Global Broadcasting (UGB) has tied up with The New Media Group (TNMG) to launch its channels - UTV Movies, Hindi Movie Channel and the recently launched business channel UTVi on TNMGs IPTV platform in Japan, Australia and New Zealand, starting August 1 2008. The channels will be a part of the “Community Packages” intended for the South Asian Diaspora.

In this context, do read this recent Knowledge@Wharton interview with UTV CEO Ronnie Screwvala. Screwvala says that there’s a segment of the audience that will not watch a movie in the theatre, so best to catch them at home in the second week. Also, if you show the movie in-flight means, people who aren’t able to watch the entire movie are likely to finish watching it later. Much more here.