UTV and Disney: A Strategic Alliance
This case is about the United Television and Software Company Limited (UTV) leadership team considering an alliance with the Walt Disney Company (Disney) in 2006. This alliance would include the acquisition by Disney of Hungama TV, India’s leading television channel for kids, created in 2004 and owned by Ronnie Screwvala, CEO of UTV (51%) and UTV (49%). Also, as part of this alliance, Disney would purchase an equity stake of 14.9% of expended capital in UTV. The total investment from Disney was estimated to be $44.5 million. Background and Dynamics of the case
Under Screwvala’s strong leadership, UTV quickly became one of India’s leading integrated media company. UTV started in 1981 as a cable TV operation company. UTV initially focused in the creation of television content for domestic and international channels until the mid 90ies. In that low risk environment, the company grew at a low pace until Screwvala pushed to diversify and enter more high return activities like airtimes sales and post-production business (1995), film distribution business (1996), film production business (1999) and broadcasting business in 2004. UTV became publically traded in 2005 and Screwvala’s consolidated his holdings in UTV at 54%. Based on his belief that strong growth for UTC and operations in the foreign markets are tightly connected, UTV expanded its operations by launching a global film distribution network in 2004. By 2006, Screwvala and Amit Banka, senior vice-president of Business Development & Strategy at UTC came to the conclusion that while expanding the base of UTV in the India market (both in existing and new verticals), expanding in the international markets was a necessity. These domestic and international expansions could be achieved by acquiring promising companies, which would require a significant amount of investment for UTV and the need to find a strategic investor. The...