UTV Software Communications Limited

Transcription

1 Movies Games Television Broadcasting New Media UTV Software Communications Limited Merrill Conference, Delhi February 09, 2010

2 Disclaimer As described in a scheme document dated 15 September 2009, UTV Software Communications Limited ("UTV") has made a proposal (the "Proposal") pursuant to which (by means of schemes of arrangement under the laws of the Isle of Man and India): the holders of the shares in UTV's subsidiary, UMP Plc (admitted to trading on AIM), not already owned by UTV (representing approximately per cent. of the entire issued ordinary share capital of UMP) will, for every 3.75 UMP Shares, receive 1 New UTV Share; all the assets and business of UMP will be transferred to UTV; and UMP will be dissolved (without winding up). For the purposes of the Proposal only, the directors of UTV, whose names are set out in paragraph 2.2 of Part Ten of the Scheme Document (the "UTV Directors"), each accept responsibility for the information in this presentation and to the best of the knowledge and belief of the UTV Directors (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. This presentation contains certain forward looking statements concerning UTV Software Communications Limited's and its subsidiaries' future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and globally, our ability to manage our international operations, government policies, fiscal deficits, regulations, etc. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company. No part of this presentation shall be reproduced, copied, forwarded to any third party either in print of in electronic form without prior express consent of the company. This presentation does not constitute an offer to sell or the solicitation of an offer to purchase or subscribe for any securities of UTV Software Communications Ltd. (the Company ) in any jurisdiction including India and the United States. No part of this presentation should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities of the Company. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the Company and will contain detailed information about the Company, its management and its financial statements. None of the Company s securities may be offered or sold in the United States, without registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from registration therefrom.

3 UTV Diversified Business Model TV Content Movies Gaming Broadcasting New Media One of the pioneers in Indian TV content production Airtime sales Multi-genre and multi-linguistic presence Licensed formats to global networks Integrated Studio Model Hindi Regional Hollywood Worldwide distribution Growing presence Console Online Mobile IP Creation Game Publishing Global market Fastest growing network with focus on youth & movies 4 specialty channels largely focused on youth Own distribution network & Worldwide Syndication Internet and mobile content and distribution Innovative offerings - Audio Cinema on mobile Portals: Techtree.com Channeltimes.com CXOToday.com Leading player Demonstrated Leadership Presence Fastest growing TV Network 1 Innovative offerings Demonstrated ability to successfully grow each vertical 1 Source: TAM, CS 4+, week 15- week 40,

4 UTV Business Model Built Scale and Diversified Diversified Revenue streams Revenue break up- 9MFY10 (Rs mn) 7,000 Over 85% of FY09 revenues achieved in 9M FY10 6,000 5,000 New Media, 2% TV Content, 14% 4,000 3,000 2,000 Broadcasting, 20% Movies, 48% 1,000 - FY07 FY08 FY09 9MFY10 TV Movies Games Content / Allied Services New media Broadcasting Games Content, 16% 3

5 Movies New growth avenues Indian Film Industry is Rs bn (USD 2.2 bn 1 ) opportunity, has grown at 17.7% CAGR over last 3 years Source: FICCI-KPMG Media & Entertainment Industry Report, 2009 Emergence of new exploitation platforms to drive growth Strong projected growth in multiplex screens from 850 screens in 2009 to projected 1405 screens nationwide in USD/ INR - 50 ~ 1,800 digital screens DTH subscriber base in India estimated to grow from 10 mn in 2008 to 28 mn in 2013 India has ~ 471 mn mobile subscribers in Sep 2009, with ~ 15 mn added every month Source: FICCI-KPMG Media & Entertainment Industry Report, 2009, TRAI evident from the share of non theatrical revenues for UTV Satellite 23% Home Video 8% Music 11% Other ancillary 1% Overseas Theatre 10% Source: UTV Actuals Films released in FY09 excludes distribution & Hollywood Domestic Theatrical 47% 4

6 Movies Demonstrated Scale Investments reflected in size of library and slate UTV adopts low risk business model Rs mn ($ mn) 1 FY06 FY07 FY08 FY09 9M FY10 Revenue 1,310 (26) 721 (14) 2,424 (49) 2,762 (55) 2,649 (53) Low Risk Producer Full control over product cycle from script to distribution Movies Released* Cumulative movies released Outstanding slate of movies Moderate Risk High Risk Financier Distributor Acquisitions do not allow control over production Rights acquisitions plus distribution = max. risk in the value chain * Excludes movies purely distributed 1 USD/ INR

7 Strong Movie Pipeline Name Est. Release Description / Director / Star cast 1 Peter Gaya Kaam Se Q4 FY10 Rajeev Khandelwal 2 Paan Singh Tomar FY11 Irrfan Khan 3 Rajneeti FY11 Ranbir Kapoor, Katrina Kaif, Prakash Jha 4 Thank You FY11 Akshay Kumar, Katrina Kaif, Anees Bazmee 5 Phillum City FY11 John Abraham 6 Ek Bataa Saat FY11 Vishal Bharadwaj, Priyanka Chopra 7 Guzarish FY11 Hrithik, Aishwarya Rai, Sanjay Bhansali 8 Alibaba FY11 Animation 9 Arjun FY11 Animation 10 Chillar Party FY11 Kids Movie 11 The Falling FY11 Aamir Khan Co-Production 12 Delhi Belly FY11 Imran Khan/ Co-Production Aamir Khan 13 No One Killed Jessica FY11 Rani Mukherji, Vidya Balan 6

8 Gaming Presence Console Gaming ( Industry size : $ 26.4 bn 1 ) Mobile Gaming ( Industry size : $ 2 bn 1,2 ) Online Gaming ( Industry size : $ 3 bn 1,3 ) UK based console gaming India based mobile gaming US based startup in PC online company in publishing and IP company gaming- MMOG creation One of the market leaders in Model based on Free-to-play, Distribution of games on major India Micro transactions console platforms like PS3, Xbox 360, Wii Strong product pipeline Relationships with Telcos worldwide Games On Demand offering through broadband in India Core markets: US own platform Worldwide Syndication 3 MMOGs under development Emerging player in a $ 31.4 bn 4 Industry 1 Figures for 2008; Wedbush: Entertainment Software Publishing and Retail; Industry Report US mobile game downloads market 3 Subscription online games and game related downloads market 4 Total of Console, mobile and online described in footnote 1, 2 & 3 7

9 Console Gaming Sizeable Market Console Gaming is a $ 26.4 bn industry 3 in 2008 projected to grow at ~ 8% CAGR over next 3 years 33.0 Key players in the industry Player Market Cap ($ bn) Sales ($ bn) ($ bn) * 1.4 * E 2010E 2011E Source: Wedbush: Entertainment Software Publishing and Retail; Industry Report 2009 Source: Company Reports, Market Cap calculated as on 13 th Nov, 2009 *1 EUR = 1.5 USD Market expansion on launch of Next Generation ( Next Gen ) consoles (PS3, Xbox 360 & Wii) PS3 & Xbox 360 account for 52% of Next Gen consoles worldwide 1 US, Europe & Japan are major markets for video games US & Europe estimated to account for 87% of global video game market in ~ 25 mn units of Wii sold in US 1 (~ 29 mn units of PS3 & Xbox 360 sold in US 1 ) Opportunity for boutique publishers who are driven by high-end IPs 1 Source: as on 24 th October Wedbush: Entertainment Software Publishing and Retail; Industry Report US, Europe & Japan markets 8

10 Console Gaming High projected growth Increasing high-end console sales contrary to global economic trends.. Average sales volumes of top games Wii Xbox 360 PS3 (Units in Million) 55 Average Volumes * Sep 2009 (mn units) Xbox 360 Top YTD 2009 Top Top (mn units) PS 3 Top Top Top Source: VGChartz as on 4 th November 2009, YTD 2009 as on 24 th October 2009 Source: VGChartz, as on 06 November 2009 * average of total sales of games released in the year 9

11 Ignition Gaming Overview Develops, publishes and distributes console games across all major platforms Product development and publishing pipeline Track record of successful games Mercury Meltdown, released in North America, Europe & Japan King of Fighters XII, released in North America (RRP USD 59.99), Europe (RRP EUR 59.99) & UK (RRP GBP 39.99) Muramasa The Demon Blade, released in North America (RRP USD 49.99) Nostalgia Role playing Game, released in North America (RRP USD 34.99) Awards & Recognitions Muramasa The Demon Blade was adjudged the Best Artistic Design and Best Action Game for Wii at E3 The King of Fighters XII was adjudged the Best Fighting Game for PS3 10

12 Ignition Gaming Infrastructure Digi-Guys, London, UK Game Development Studio Ignition, Waltham Abbey, UK Game Publishing, Corporate Head Office Ignition USA, California Game Publishing Ignition Florida Game Development Studio Ignition Japan, Tokyo Game Development & Publishing Operational Presence 11

13 Online Gaming Emerging opportunity Online gaming companies enjoy high EBITDA margins CY08 Sales ($ mn) EBIT Margin 325* 58% % % 251 8% Source: Company Reports *1 USD = 6.8 RMB Community development and engaging game play to drive online gaming format growth World of Warcraft has 11 mn players worldwide and raked in $104m in 2008 Xbox Live community has over 17 mn members 1 Online gaming model has seen great success in Asia Pacific Asia Pacific subscription revenues for MMOG add up to $500m - $700m 1 US & Europe online gaming markets are growing 1 Wedbush: Entertainment Software Publishing and Retail; Industry Report

14 True Games Overview US based online game developer & publisher Creates and owns IPR Free-to-Play, Pay-for-Item format Own platform in USA & Turkey supported by syndication for Europe & Asia Expansion packs anticipated to increase game longevity and momentum Planned supplementary Revenue Streams In-Game advertising Licensing/ Merchandising Peak concurrent users of Top 10 Chinese games Westward Journey 2,322 ZT Online 1,578 World of Warcraft 995 Popkart 800 Audition 780 TLBB 700 Dungeon & Fighter 700 Bomb & Bubble 700 Ask Tao QQ Fantasy Source: Nomura Report, Jan 2009 Monthly ARPUs indicate upward trend in China ( 000 users) Average Monthly ARPU in China ($)* E Source: Nomura Report, Jan 2009 * USD/ CNY

15 Indiagames Market Leader Mobile Games Development, Publishing & Distribution One of the leading players in Indian mobile gaming market Indian mobile gaming market estimated at Rs 1.4 bn ($28 mn 1 ), growing at 37.4% CAGR mn mobile subscribers, ~ 15 mn added every month 3 Provides games from worldwide game publishers including Disney, EA, Dig Choc, Glu, THQ, Iplay Advent of 3G and better quality of handsets expected to drive mobile game growth Games on Demand (GOD) Unique offering in India that provides console games on PC platform through broadband subscription based model Currently available on BSNL & Airtel broadband distribution 1 USD/INR 50 2 FICCI KPMG Report TRAI, Sep

16 Broadcasting Capitalizing on Specialty Segment Growth UTV addressable market as share of total viewership has increased from 17% in 2007 to 18% in 2009 UTV Addressable Market, 17% UTV Addressable Market, 18% Others, 50% Others, 44% Hindi GEC, 33% Source: TAM, HSM CS 4+ Source: TAM, HSM CS 4+ UTV Addressable Market includes Hindi Movies, English Movies and Youth UTV Addressable Market includes Hindi Movies, English Movies and Youth Hindi GEC, 38% Projected subscription revenue growth.. (Rs bn) driven by projected higher penetration of DTH in India Pay DTH subscriber base (mn) P 2010 P 2011P 2012P 2013P P 2010 P 2011P 2012P 2013P Source: FICCI-KPMG Media & Entertainment Industry Report, USD/ INR - 50 Source: FICCI-KPMG Media & Entertainment Industry Report,

17 Broadcasting Key Properties 61% increase in Gross Rating Points ( GRPs ) in 52 weeks (to 50) Hindi Hindi Movies Movies Channel Channel Weekly GRPs ( ) Largest number of premiers for Indian movie channel (including Jodha Akbar, Race & Rock On) Source: TAM, HSM, CS 4+ Week 1 '09 Week 1 '10 Youth Youth Entertainment Weekly GRPs ( ) One of the leading Youth Entertainment Channels in India New media presence with dedicated website Week 1'09 Week 1 '10 Source: TAM, HSM 1mn+, CS AB 16

18 Broadcasting Key Properties International Blockbusters Weekly GRPs ( ) 3.5 International blockbusters sub-titled in English Average ~ 3-4 GRP Above Zee Studio / Warner / MGM 3.2 Week 1 '09 Week 1 '10 Source: TAM, 5 Metros, CS 25+ A Action Action Movies Movies India s first 24-hour Hindi channel for cutting edge Bollywood and Hollywood action movies Launched on January 01, 2010 Biggest action blockbusters with biggest stars GRPs of 32 within the first week of launch Over 200 movies in library 17

19 Broadcasting Fastest growing Network Channel Week 15 (2009) Week 2 (2010) % variance UTV Group % Sahara Group % NDTV Group % Sony group % Viacom % Zee Group % Star Group % Source: TAM TG: CS 4+ HSM Fastest growing broadcasting network in India over 100% growth in GRPs in last 9 months Positioned in niche segment youth audience Leverage own content library and partnership with Disney Focus on subscription revenues & International sales 1 TAM, HSM, CS Yrs Week 15 to Week

20 TV Content At the vanguard of innovation Demonstrated ability to create innovative programming Dance India Dance (Zee TV), Ek Khiladi Ek Haseena (Colors), Towering Inferno (Nat Geo) Developed original formats and licensed to international networks Multi-genre and multi-lingual programming One of the leaders in airtime sales on Sun Group Stable cash flow business with a ROCE 1 of 14.2% in FY09 Commissioned Shows Sid vs Varun (Bindass), Sonu Sweety (SabTV), Anamika (ETV Marathi), Ratha Saptami (UdayaTV), Raktha Sambandham (GeminiTV), Emotional Atyachar (Bindass) Pipeline of shows Prajaktaa (MI Marathi)- a Marathi daily show Consolidated in a fragmented market through Joint Ventures & Alliances 1 Segment PBIT/(Segment Assets Segment Liabilities) for reported consolidated FY09 New media segment financials 19

21 New Media Good Start Growth driven by innovation in content and delivery platform/ mechanism Innovative service offerings exploiting long tail of content - for example, Audio Cinema Web based models provide immense opportunity in B2C 1 space Techtree.com is one of the leading technology news and review sites in India 60 advertisers were on the network this year Aggregator for UTV Group content 1 Business to Consumer 20

22 Disney Connect Strategic Investment ~ $ 400 mn invested to date ( includes ~ $160 mn in open offer ) Helped consolidate 5 verticals into one VISION Synergies in each of the business verticals Leverage complementary strengths of global partner to further international growth 21

23 Corporate Structure UTV Software Communications Limited (Film Production and Distribution, TV content Production, A&S and Dubbing) 100% 100% 85% 100% TV Content Motion Pictures UTV Global Broadcasting United New Media Ventures Ignition Ent, UK 90% All Businesses consolidated in one entity Indiagames 59% Value of individual businesses captured Flexibility to extract value from individual businesses Gaming, Broadcasting & New Media assets under separate holding companies True Games 89% This does not depict an exact legal structure 22

24 Strong Management Depth Board of Directors Disney - 3 Promoters - 3 Independent - 6 Group CEO Group CFO TV Content Motion Pictures Broadcasting Games Content New Media Group Business Dev & Strategy COO CEO CEO CEO, Truegames CCO CEO, Ignition CEO CEO, Indiagames Professional Management team incentivized by Stock Options 23

25 Shareholding Structure Equity Shares 40.6 million Public 29.9% Promoters 19.6% Disney Open Offer 19.1% Disney 31.4% Notes: Open Offer shares are contractually restricted from being voted upon. Promoters have an option to buy back from Disney within 4 year period (i.e. by Nov 2012) subject to certain conditions. Market Cap on expanded equity is around USD 408 million 24

26 In a Nutshell Significant head start Content and IP Focus high value drivers Operating in businesses with potential for significant scalability Proven execution track record in Movies and TV content with growing operations in Game content, Broadcasting and New media Group has enjoyed partnerships with key industry leaders like Disney, News Corp, Bloomberg 1, Warburg Pincus, Cisco, Adobe UTV has well positioned model in Media & Entertainment space 1 Alliance with UTV News Ltd. a promoter group owned entity 25

27 Thank You 26

28 Financials Rs mn FY07 FY08 FY09 9MFY10 Sales Movies 721 2,423 2,762 2,649 Games Content/Allied Services , Broadcasting TV 899 1,006 1, New Media Sales - Total 1,749 4,342 6,066 5,372 EBIT Movies Games Content/Allied Services (289) (11) Broadcasting - - (282) (218) TV New Media - - (45) (65) EBIT (24) 373 PBT (68) PAT (after minority interest) Capital Employed Movies 1,546 4,168 9,080 5,383 Games Content/ Allied services 928 1,390 3,344 4,729 Broadcasting - - 3,634 5,314 TV New Media Total Capital Employed 3,450 7,270 18,572 18,102 27

29 Financials $ mn (USD/INR - 50) FY07 FY08 FY09 9MFY10 Sales Movies Games Content/ Allied Services Broadcasting TV New Media Sales - Total EBIT Movies Games Content/Allied Services 1 2 (6) 0 Broadcasting - - (6) (4) TV New Media - - (1) (1) EBIT 4 16 (0) 7 PBT PAT (after minority interest) Capital Employed Movies Games Content/ Allied Services Broadcasting TV New Media Total Capital Employed

30 UTV Motion Pictures in News 29

31 Board of Directors Name Rohinton Screwvala Zarina Mehta Deven Khote Andy Bird Kevin Mayer Robert Gilby Sanjaya Kulkarni Suketu Shah Darius Shroff Prem Mehta Narendra Ambwani Sanjay Purohit Category Promoter Executive Promoter Non Executive Promoter Executive Non Independent Non Executive Non Independent Non Executive Non Independent - Non Executive Independent Non Executive Independent Non Executive Independent Non Executive Independent Non Executive Independent Non Executive Independent Non Executive 30