UTV prunes broadcast investment; movie biz unaffected

MUMBAI: In lieu of the recent recession that has hit global markets, the Indian media and entertainment industry has also witnessed several setbacks.

Acting on these cues, UTV Software Communications has significantly rationalised investment in its broadcasting arm. However, the company motion picture division – UTV Motion Pictures has not been affected by the economic slowdown.

The company has said that its motion pictures division has had its best year so far and expects to end second half of the year equally well. "We have managed to continuously increase our movie slate. Unlike others who had been paying high rates to acquire movies, it has not been UTV’s policy to acquire movies but to produce them ground up and this is what is holding us in good stead," the company said in a statement.

Moreover, its gaming, new media and TV content business is also on track as projected at the beginning of this year. "In spite of the overall economic environment we are on track to end the financial year as per our growth projections," the statement said.

As far as cutting back investment in the broadcasting sector is concerned, the company undertook a sharp review over the last 60 days and has decided to shut its Delhi operations. The company has consolidated operations for its four channels from its Mumbai office. Previously, the company’s two channels were run from Delhi. "Phasing out of Delhi operations for our Broadcasting Channels has resulted in substantial cost saving," it read.

"By overall rationalization of costs and investments primarily through savings in Capex, carriage fees and total overheads, we have rationalized our future investment plans by cutting down investments by over Rs 2 billion (Rs 200 crores) to ensure that our future investment doesn’t exceed Rs 1 billion (Rs 100 crores) in addition to the initial investment of Rs 3.60 billion (Rs 360 crores) made by Disney and UTV," the statement said.

This resultant saving of Rs 2 billion also cuts down projected losses by more than 60 per cent to result in three clear set benchmarks:

1) Loss in the broadcasting vertical for Q3 and Q4 of the current fiscal 08-09 does not exceed Rs 150 million (Rs 15 crores);

2) Loss for fiscal 2009-2010 doesn’t exceed Rs 250 million (Rs 25 crores).

3) Breakeven achieved in subsequent year.

With its broadcasting plans substantially rationalized, UTV now expects its gaming business to lead growth in fiscal 2009-2010 along with its motion pictures division, which has a robust slate of movies lined up.

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