Disney buys Bollywood TV firm

Walt Disney is buying into Bollywood in a deal that involves two of that industry's best-known family entertainment brands.

The US studio will pay $14 million (€11.13 million) for a 14.9 per cent stake in UTV Software Communications and will acquire the Mumbai media group's business that controls its successful children's television channel, Hungama TV, for $30.5 million.

The acquisition strengthens Walt Disney's presence in a market where its own children's channels trail behind competitors such as Cartoon Network and Pogo, part of the Turner stable, as well as Hungama itself.

"Disney is buying market share. It gets a step up in a cable market for which it has arrived late and paid high carriage fees and it gets an opportunity to increase its distribution," said Vivek Couto, analyst at Media Partners Asia in Hong Kong.

Walt Disney will use its partnership to experiment with global television formats in the local market, outsource post-production to India and step up local filmmaking. It also gains a local co-production base in a market where segmented, regional programming in languages from Hindi to Telegu is critical, as the runaway success of Star, part of Rupert Murdoch's News Corp, has illustrated. Bollywood, the popular name for the Hindi language film industry, also beckons as Disney will co-produce UTV's films.

"We have access to an important filmmaking capital, which is exciting because Bollywood's family values resonate with Disney's," said Andy Bird, president, Walt Disney International.

UTV was founded by Ronnie Screwvala, the former actor, in 1991. Its early success in TV production grew into a platform for animation and filmmaking.

Hungama, launched in 2005, has gained a big share of the $30 million-a-year children's television advertising market, becoming the second most popular children's channel.

Disney said it was unlikely to meddle with the programming formula at Hungama, although it sees wider opportunities for common content and distribution.