UTV To Sell Hungama TV Stake To Disney; Strikes Content Deal With DivX

UTV Software Communications has been busy: Moneycontrol.com reports that Walt Disney is adding UTV’s Hungama TV to its Indian basket comprising Disney Channel and Toon Disney/Jetix. Hungama is a 22 month old, 24 hour Hindi-language entertainment channel for kids. UTV, which had consolidated revenue of Rs. 523 million and net profit Rs.34 million for the quarter ending June 30 2006, gets Rs 654.5 million for the deal, which awaits regulatory approval. UTV has also issued warrants to its the promoters, and these are convertible into shares. The total proceeds amount to Rs. 2 billion, and this will be used for content development, movies and new media ventures. UTV will continue to provide content for Hungama. UTV Chairman and CEO, Ronnie Screwvala said in an interview that UTV is building a warchest for M&A.
Also, according to a press release, UTV has tied up with DivX Inc., a US based digital entertainment company, to provide the Indian consumer with Hollywood and Bollywood films in the high quality DivX format. Ronnie Screwvala adds that the new technologies will give consumers greater control over viewing entertainment content. DivX is a patented technology, while MPEG-4 is open source.
Until now, users in India have been able to purchase software based decoders for watching DivX content on their computers. Without DivX’ support, and lack of availability of DivX based content in the market, DVD player manufacturers, like Sony and Philips, have refrained from promoting DivX DVD players in India. LG has only recently launched its DivX DVD players, priced between Rs 3,490 and Rs 4,490.
For the users, choice of technology depends largely on availability. It remains to be seen whether content providers will switch formats and increase distribution of DivX based content, and reduce that of other formats. Customers may not be happy being forced to switch, but DivX DVD player manufacturers definitely will. UTV’s gamble to focus on content, and quality content at that, might pay off.
Related:
Pyramid Saimira In Talks With UTV Software, Rajshree And Others For Content
UTV Signs Up Two Animation Deals Worth $14 Million; Imageventure Bags $2.5 Million Deal
UTV Invests $5.5 Million In New Animation Facility

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