Kishore Sharma - Televisionpoint.com | Mumbai V&S Broadcasting, the broadcasting arm of UTV Software Communications, which owns four channels - Bindass, Bindass Movies, UTV Movies and World Movies, has done "a very sharp review" of its investment plans.
V&S Broadcasting has now decided to shift its operations completely to Mumbai, which is where it is headquartered. The UTV Movies and World Movies channels used to operate from Delhi, and now, UTV has decided to consolidate its entire operations in Mumbai.
Ronnie Screwvala, CEO, UTV Group, in an internal communication, says that the economic slowdown, with its ensuing liquidity crunch, is the main reason for this step. The change will be implemented in the next three months.
As a result of the closure of Delhi operations, many employees are expected to lose their jobs, though the mail says that a few employees will be given the chance to relocate to Mumbai. However, the company's sales function will continue to have a national presence and will carry on in the Capital too.
The email also says that Screwvala, who independently owns 100 per cent stake in UTVi, the English business channel, plans to offload 20 per cent stake to UTV Software Communication, the holding company.
The company is also looking at rationalising all costs, including capital expenditure, proposed start of new channels, carriage fees and other operational costs. Programming and initiatives that have the potential to affect the popularity and functioning of the channels will not be tampered with.
All these measures are expected to help UTV save about Rs 200 crore in the next two years. Initially, the company had chalked out an investment plan of Rs 600 crore for the period.
Screwvala said in the mail that broadcasting is a three-four year break even proposition, requiring substantial investment, but now with these corrective measures, the company hopes to advance its break even period by 24 months.
For the record, Walt Disney Co. owns 32.1 per cent share in UTV Software Communications. Till September 2008, UTV and Walt Disney had invested Rs 360 crore in the broadcasting business.
Reassuring his employees through the mail, Screwvala said, "Despite the recent partnership and the investment from Walt Disney, we had to take this step. This has been a very critical exercise, and I can assure you that contrary to what the competition and skeptics may have to say, we have been and will be viewed as the most proactive in this space."
Screwvala adds that while the company has taken some corrective measures for one of its verticals, it will continue to be aggressive on growth plans as well as mergers and acquisitions. He says that in the next six-12 months, many unique opportunities will come their way with the help of Walt Disney.
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