26 July 2006

Disney enters Bollywood stage with UTV deal
By KHOZEM MERCHANT
Financial Times
London Ed1

Walt Disney is buying into Bollywood in a deal that combines two of the world's best-known family entertainment brands.

The US studio will pay Dollars 14m for a 14.9 per cent stake in UTV Software Communications and will acquire the Mumbai media group's business that controls its successful children's television channel, Hungama TV, for Dollars 30.5m.

The acquisition strengthens Walt Disney's presence in a market that it describes as strategic but where its own children's channels have trailed behind competitors such as Cartoon Network and Pogo, part of the Turner stable, as well as Hungama itself.

"Disney is buying market share. It gets a step up in a cable market for which it has arrived late and paid high carriage fees and itgets an opportunity to increase its distribution," said Vivek Couto, analyst at Media Partners Asia in Hong Kong.

Walt Disney will use its partnership to experiment with global television formats in the local market, outsource post-production to India and step up local film-making.

It also gains a local co-production base in a market where segmented, regional programming in languages from Hindi to Telegu is critical, as the runaway success of Star, part of Rupert Murdoch's News Corp, has illustrated.

Bollywood, the popular name for the Hindi language film industry, also beckons as Disney will now co-produce UTV's films.

"We have access to an important film-making capital, which is exciting because Bollywood's family values resonate with Disney's," said Andy Bird,president, Walt Disney International.

UTV was founded by Ronnie Screwvala, the former actor, in 1991.

Its early success in TV production grew into a platform for animation and film-making, for art-houses and Bollywood.

Its Hindi-language Hungama, launched in 2005, has gained a big share ofthe Dollars 30m-a-year children's television advertising market, becoming the second most popular children's channel.

Although UTV is moving out of children's broadcasting, it will continue to make programmes, animation and films for young audiences.

Disney said it was unlikely to meddle with the successful programming formula at Hungama, although it sees wider opportunities for producing common content and distribution.