UTV Software Communications Ltd (UTV), one of the most important integrated global media and entertainment companies in India, has seen recent rapid expansion, both in existing home business and into new offshore operations.
The CEO Ronnie Screwvala was driving the company on a double track:
On one hand he had started three verticals in India in order to diversify the offer and take advantage from the high-growth sectors opportunities;
On the other hand he wanted to expand worldwide the business throughout the launch of a global film distribution network in the United states, the United Kingdom, the Middle east and Mauritius .
In order to sustain the ambitious project of the firm they ...view middle of the document...
First of all the most obvious effect of these alliance should be the cash inflow, that in a short-run prospective represented the possibility to achieve the predicted goal of RS5Billion by 2008, this fact might be evaluated positively by short-term investors.
Secondly the synergy could give an important contribution to the global plans of the firm, especially in movie production business , post production and SFX and broadcasting. From this point of view it's clear that Disney is firmly interested to the high future revenues and market share increasing that could come from that the Indian television market (Hungama) and the movie production market (Bolliwood). On the contrary UTV managers are fascinated by collaboration opportunities in offshore projects that will improve the brand image abroad.
On that moment Screwvala, Banka and colleagues had to consider also the other side of the coin, evaluating if selling a TV channel as Hungama may be considered a justified sacrifice, since this channel represented in 2004 an attractive investment , within 20 months of its launch it became the number 1 channel in the kids segment but in 2 years and after some changes in the organization, important inventors was starting to see Hungama as question mark giving not too much faith to the project.
From a market analysis should be underlined that the presence of foreign competitors such as Time Warner(Pogo) and Turner Broadcasting (Cartoon Network) had influenced the kids cartoon sector and even if the Indian audience generally had never preferred western content recently this trend was gradually reducing but not enough to marginalize local content that represent a very strong point of Hungama. Even tough the offer is very attractive, UTV should not loose definitely one of its promising channel but it should maintain its position and, if possible, launch a new channel oriented to a teen-audience(12-18 years old). More over Disney wants to make the operation probably because Hungama is considered a direct competitor. For this reasons Disney doesn't want to establish a collaboration with UTV in some sectors and be competitors in some other, that type of conflict means that choosing Disney as a partner UTV will never expand more its business in sectors where Disney is already present.
Furthermore there are some important negative aspect that could not be ignored, Disney acquiring a considerable part of UTV limits the control of the firm because of their size and span of operations are really huge, in addition the alliance might limit opportunities of...