Not in talks with Future Grp or Walt Disney: UTV

He further added that UTV would look to hold majority stake in broadcasting business. He is hoping to sell stake in broadcast business in next three months. Screwvala  said that they do not have any firm plans of launching a business channel.

Excerpts from CNBC-TV18’s exclusive interview with Ronnie Screwvala:

Q: There has been too much news floating around. Why don’t you start off with a clarification on whether or not Future Group has indeed approached you for picking up a stake in your company and what is the status with Walt Disney at this point?

A: Both these discussions are completely and absolutely speculative. Both Kishore Biyani and I have publicly denied both the comments. We haven’t had any discussions. So, we are categorical in our denial.

Walt Disney is a shareholder of the company. I think there has been some speculation that has come from all quarters; we’ve made our clarifications very clear - both to the stock market and to our investors.

Number one, we are in discussions with various people when it comes to an investment into our broadcasting channels, two of which have launched, three more are launching.

Number two; we already have an in-principle okay from our shareholders to raise up to USD 100 million. At this point in time, we are looking at it from a GDR perspective, but we are also talking to other strategic partners.

So, I think the sense and speculation seems to be one of imminence. I think right now we are pretty much well farmed out in our movies and in our broadcasting and we are unraveling a bouquet. So, there is a time parameter for everything.

Q: The price that was quoted for Walt Disney to acquire additional stake into your company - that is a 25% premium to the current market price. The price that was floating around that Future Group may be interested in your company is a 50% premium to your current market price. Do you have an inherent sense of what your company should actually be valued at on any parameter, probably on a market cap basis or an enterprise basis? Have you done any sort of study?

A: No, we cannot comment on absolute fiction that comes out from one or two press or over-enthusiastic journalists who think they have another story. So, it is all pure speculation.

Q: Just on a pure valuation basis, just to value your company as a whole, have you done any sort of valuation as to what UTV should be valued at right now given all your launches planned on the broadcasting front as well that you spoke about?

A: Well I don’t see any promoter group or any management ever thinking that the company is aptly valued. So, that is always a subjective point of view. Number one, very clearly, we have reengineered the company in the last 18 months into strong verticals; all at the top end of the value chain. The movies part is the mature part of the business. Everyone has seen the broadcasting story evolve. And I would say we are the largest gaming company here with revenue that we will post this year.

So, slowly but surely, over the last six months, the unlocking of value in all these three verticals and of course our fourth, which is our television content is arriving, and I think people are ascribing value to each of theirs.

Today, broadcasting is still nascent. So, I think people are using the sum-of-the-parts valuations; some of them are looking at it from an investors’ point of view. But I think in the next six months to one year, we would see that being appropriately rated.

Q: Could you talk about the kind of plans that Walt Disney has as a strategic investor in your company? Have they indicated at all at this point in time to kind of bring down their franchisee model also as part of the investment that they make at this point? Any plans that they have shared with you of what they might want to do with the investment that they have in your company?

A: The Walt Disney Company took a 14.9% stake in November of last year. It has been a synergistic stake; it is not a strategic stake. We’ve always explored ways in which to do something together in any of the verticals from broadcasting, animation, movies and all of that.

They are not privy to share their plans with us. We are not privy to share our plans with them. So, I don’t think anything in the franchising and merchandising would be something that we would share notes on. But we have exchanged views on animation, movies and the others.

Q: What is your total requirement on the broadcasting side of the business right now? What is your comfort level beyond which you will not place a certain percentage stake with private equity players or people who are genuinely interested in the company?

A: Firstly, the speculative rumours are actually assigned to the fact that the promoters were either diluting or selling off. Neither of them is categorical. I think India is a rocking country at this point. We’ve all built companies at this stage, which are in high stage of growth. So, I don’t see any promoter looking at any liquidation, exiting in any form. And that is categorical as far as I am concerned. So, I think all of that would be speculation.

Number two, the outlay that we have in terms of broadcasting, we see an outlay of about Rs 400 crore odd. But there is a cap at which UTV as a company will necessarily invest and we are going to look at strategic level investment at the broadcast level, and some funding coming from UTV.

So, the hybrid of the funding that we are looking at today for which we are in advanced talks with two companies, is specifically for investment of a little nature into UTV and subsequently and simultaneously into the broad company.

Q: In terms of a percentage stake sale, how much would you look to sell out in your broadcasting business if at all a serious investor came in, beyond which you will not sell in your broadcasting business? Is that something that you have worked out?

A: Well, in the broadcasting business, at the end of the day, UTV needs to hold a majority, and if that majority is a minimum 51%, that is what it would be. And I think it will really depend on the valuation. And it is not at first tranche; it could mean two tranches. So, definitely and clearly, UTV would like to own a sizable chunk of broadcasting. We are not going to part with controlling interest.

Q: You have talked about the deal being in advanced stages. By when would you announce or complete the deal?

A: Well again, till it is closed, we can’t really talk about an estimate from that point of view. We are hoping in the next 90 days, and substantially before that.

Q: When are you launching your business channel?

A: That again is in the realm of - that is speculation. We haven’t really announced any firm plans on that.