Rohinton (Ronnie) Screwvala's

The company's management reveals that it will be raising Rs200 crore from the stake sale.

Further, it is looking at consolidating operations with Walt Disney over the next three months and is also looking at building a war chest for M&As. CNBC-TV18 shares with domain-b excerpts of its exclusive interview with Screwvala, founder promoter, UTV:

Why the decision to get out of Hungama and sell it to Walt Disney?
We have been exploring a strategic relationship with these people over the last three months and then we finally started negotiating with Walt Disney for a broader alliance.

In that alliance we need to look for a broader framework. From Hungama's point of view we brought it to a leadership status for it to go to the next level growth. That's the sort of deal we worked out with Walt Disney, and part of that process is an overall investment and their investment of 14.9 per cent at UTV reflects, their commitments, our commitments and keeping space.

The 'keep space' overall for us is a combination of animation, movies and TV content and broadcasting. Going forward looking at this alliance, we see ourselves moving to new levels in movies and content production.

You are going to get quite a bit of cash into the company right now after this deal for Rs 70 crore from the sale of the Hungama subsidiary. Rs65 crore is what Walt Disney is putting in, and you will put in some through warrants as well? What do you need and how do you wish to deploy this cash?
The total sales transaction is around Rs200 crore from the fresh equity as well as the sale of Hungama. Outside of partly retiring debt, our strategic initiatives are primarily in movies, new media, animation, most of our content activities and scaling them up. We are also building a war chest to look at some M&A, but it is too early to talk about that.

This will require some equity dilution as well for UTV?
They are coming with 14.9 per cent on the expanded base. So I do not think there will be too much for dilution rather than 14.9 per cent. I think the warrants are with the purpose of necessarily keeping the promoter group's stake intact as we go forward.

What has happened with UHEL, is it just UTV that is selling its 14.9-per cent stake or will you be offloading a bit as well?
It is an outright sale completely and most of the money flows into UTV. The financial gains are not necessarily to me because primarily UTV had put in more finance. So from the preferential share offerings that UTV has done the bulk of the proceeds go into UTV, and little to me personally.

How much are you putting in through warrants?
My warrants going forward will be to the extent of Rs36 crore.

What do you expect to see from this relationship with Walt Disney picking up 14.9 per cent? As a business rub off what kind of relationship rubs off do you see yourself doing directly with them going forward?
It's early days to go into that over the next three months. We will consolidate that and see how we can take that forward. But the natural area for us is their commitment towards growing the domestic market, which is high. That is what they are looking at.

For us to look at the international spectrum and what they can do with us in movies, animation and ofcourse the new media. These are the three areas, which we will look at in our synergies, going forward.

Will Hungama become a part of the Disney channel and Toon Disney, the two channels which are currently running. Will you also produce content for Disney?
Yes, I am sure we will be continuing to do that as we go forward. Actually Zarina Mehta, who is the Director in UTV continues to have an association with that to look at how the integration goes forward. As I said it's not really anything else, but overall a group strategy for us to look at. But content flow will come from UTV on a regular basis.

With this you are sort of vacating the channel space. Do you want to focus more on content then, and not become a channel owner as you were with Hungama through your subsidiary?
I would say we are not done with broadcasting space; we have some plans but again too early to tell. Having said that, to us content is also distribution platform, so it is going up the value chain. For example in movies and animation, for us to create our own content and distribute them worldwide to a certain extend is similar to broadcasting. So it is not just a pure content play but yes, our focus originates from content.

Disney will restrict themselves to 14.9 per cent and not go in for that higher stake which would necessitate an open offer?
At this point they are looking 14.9 per cent. I think it could be upto them to see how they want to consolidate this in the years going forward. Obviously it will always be guided by regulatory reasons at that time. As a creeping process I think the percentage for them is not as important as the strategic relationship.

This is the one time sum that Walt Disney will be paying you or are there more financial inflows from the company into yours?
In terms of business we hope there will be a continuing synergy as we go forward. In terms of equity at this point that is all that's envisaged, we do not have anything in discussion right now.

Post this deal what is the total foreign holding in UTV?
It is difficult for me to give a breakup in terms of foreign holding but by and large there is a promoter group that is about 43-44 per cent and outside of that 54 per cent is much widely held.

A lot of them will be with FI's and FIIs most of it from that point of view. If one looks at the fact that post my warrant the promoter takes stakes between 42-44 per cent that's a balance with few domestic investors, a lot of foreign institutional investors and of course a strategic partner.