UTVs yet-to-be-launched news business has been hived off from UTV Global, I just confirmed from the company. Mint had reported the launch of the News co as a new company by Screwvala, contrary to what the company had told us a couple of weeks ago, so I confirmed this. The implications of UTV News being hived off:
— Disney (NYSE: DIS) is picking up 15 percent stake in UTV Global for $30 million, and UTV News is not a part of this deal
— UTV Global is now a general entertainment broadcasting venture (includes the Bindass and World Cinema portfolio), so is not subject to the 26 percent foreign direct investment limit that news channels in India are limited to. This also means that UTV Global can raise more money internationally – or sell out completely to a foreign entity (Disney permitting).
— Ronnie Screwvala will hold 80 percent in UTV News, and the rest will be held by UTV Software. By virtue of Disney’s 32.1 percent stake (post the open offer) in UTV Software, they will hold 6.42 percent stake in UTV News. That means, UTV News can still sell off 19.58 percent stake to a foreign investor.
That foreign investor, according to Mint, is likely to be Disney owned ABC news, which isn’t surprising. Sources have also told Mint that UTV News has signed content deals with ABC and Reuters; the deal with Reuters (NSDQ: RTRSY) is non-exclusive.