Essay on Utv and Disney: a Strategic Alliance

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UTV and Disney: A Strategic Alliance

Case Overview

This case is about the United Television and Software Company Limited (UTV) leadership team considering an alliance with the Walt Disney Company (Disney) in 2006. This alliance would include the acquisition by Disney of Hungama TV, India’s leading television channel for kids, created in 2004 and owned by Ronnie Screwvala, CEO of UTV (51%) and UTV (49%). Also, as part of this alliance, Disney would purchase an equity stake of 14.9% of expended capital in UTV. The total investment from Disney was estimated to be $44.5 million.
Background and Dynamics of the case

Under Screwvala’s strong leadership, UTV quickly became one of India’s leading integrated media
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Both UTV and Disney are operating in the Media and Entertainment (M&E) industry. In India, this industry is similar to that in other countries (high annual growth rate, composed of several segments but mostly driven by television and films), with some local specificities (high demand for indigenous content as opposed to localized one, fast rising production and distribution costs, piracy). India’s specific demographic factors (highly educated, young population with rising disposable income) make it one of the most important markets from the perspective of growth within the Asia-Pacific region, which is one of the fastest-growing M&E markets. It has attracted several international companies, which are already generating most of their global revenue in the India market.
UTV has mastered the specificities of the Indian M&E industry and put itself in key position to be successful and benefit from the growth potential in India. With its diversification strategy and the switch to a business-to-consumer (B2C) model, Screwvala moved UTV to a more scalable model and in a position to control its destiny. Researches have shown that the film entertainment was one of the fastest-growing industries because it was the primary source of content for television. By entering and investing heavily in the film industry business UTV generated a driver for his other verticals, despite there is a lot of
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