Ronnie Screwvala's UTV Software Communications on Monday offloaded its entire 44 per cent stake in the Chennai-based Tamil channel Vijay TV to Star India, owned and controlled by Rupert Murdoch's media conglomerate News Corporation. The stake sale will fetch UTV Rs 31 crore (Rs 310 million).
The divestment is in line with UTV's strategy to focus its broadcasting services on its kids' channel, Hungama TV, an UTV release said. Hungama TV is slated to be launched in October. Around the same time, UTV is planning to enter the capital markets with its initial public offer.
With the buyout, Star India has become the sole owner of Vijay TV apart from being the 24-hour channel's distributor.
Vivek Sengupta, head of corporate communications at Star India, said, "This acquisition strengthens Star's regional content business. Our increased investment in Vijay TV is a testimony to our commitment to the south Indian market."
"Broadcasting is one of the three key drivers in our revenue model for the future and we clearly wish to put more focus on the kids' arena with Hungama TV," said Ronnie Screwvala, chief executive officer of UTV.
The kids' channel that is priced in the Rs 4-8 bracket will be available on the Star Network platform. Earlier in June, Screwvala had consolidated his stake in the company to 54 per cent through a buyout of News Corporation's 15.5 per cent stake (held through Star India) in UTV for an undisclosed amount. He had also picked up another 12.4 per cent from CDPQ, a Canada-based pension fund.
UTV, which sells television content to Star, Zee, Sony and Walt Disney, has a distribution alliance with Star Network for Hugama TV. The media house has also diversified into production and distribution of films.
"We have a co-production alliance for movies, with projects up to Rs 25 crore (Rs 250 million) finalised and locked in," said operations and finance director, Ronald D'mello.
UTV plans to offer 34 per cent of its stake through an IPO of 59.99 lakh (5.99 million) shares of Rs 10 each. The offer consists of a fresh issue of 30 lakh (3 million) equity shares and an offer for sale of 29.99 lakh (2.99 million) shares. The sale offer is being made by French private equity investor CDP Media Holding, Mauritius.According to sources, CDP Media is exiting the company as part of its strategy for Asia. The company reported a net profit of Rs 8.5 crore (Rs 85 million) on revenues of Rs 87 crore (Rs 870 million) for the 10 months to January 2004.