Why would Kishore Biyani look to buy out UTV?

UTV Software Communications, one of the profitable media companies is attracting interest from unlikely quarters.

After its impending sell-off to Walt Disney, the market is ripe with rumours that Future Group’s Kishore Biyani may pay a 20% premium to the price committed by Disney and acquire 51% stake for Rs.1751 crore. The 51% stake would include the 37% stake held by UTV promoters.

But the big question remains why is Biyani willing to pay such a high price in a business vertical where it currently does not have a presence apart from Future Media.

To start with, Biyani is on the board of UTV and would have known the business of UTV completely and explored its complete potential. Future Group is already aggressively positioning its media space and would have opted for vertical integration in a bid to expand the business.

UTV is present in 4 businesses of movie production/distribution, television content, broadcasting and animation/ gaming. These verticals could catch Biyani’s attention as it could supplement its retail business through these channels through promotion and inhouse advertising.

Also, with UTV’s offerings being targeted primarily towards youth, it gives it an added edge to cater to its prime target audience.

And don’t forget, movie production has been Biyani’s first love, though the success of that venture is a separate issue for discussion.

Earlier this year, there were also talks of UTV and Future Group opening up Cafe Lounges targeted at youth. via