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Prior To Delisting Disney Controlled UTV Sinks Into Big Loss In Q3; TV, Movies & Games Biz All In Red

UTV Software has reported a sharp deterioration of its bottom-line for the quarter ended December 31, 2011 with all its three business segments television, movies and games & interactive business reporting segment losses. In the previous quarter ended September 30, 2011 only the television had reported segment loss while the other two businesses reported pressure on margins.

UTV, which is now controlled by Walt Disney, reported almost four fold jump in net loss to Rs 96.2 crore for the three months ended December 31, 2011 compared to net loss of Rs 27.88 crore for the previous quarter ended September 30. The company had consolidated profit of Rs 39.98 crore in Q3 FY'11.

The company's net revenues was also down 38 per cent over the year ago period and 31.3 per cent sequentially to Rs 158.53 crore during Q3 FY'12.

UTV Software scrip rose 0.22 per cent and was trading at Rs 1,064.9 a share, on BSE on Tuesday. Disney is in the process of delisting the firm from Indian stock exchanges.

The consolidated results include the subsidiaries: UTV Communications (USA) LLC, IG Interactive Entertainment Ltd, UTV Global Broadcasting Ltd, UTV TV Content Ltd., UTV Games Ltd, First Future Agri & Developers Ltd, UTV New Media Ltd, Indiagames Limited, Screenshot Television Limited and the group´s step-down subsidiaries -Ignition Entertainment Ltd., True Games Interactive, Genx Entertainment Ltd, UTV Entertainment Television Ltd, UTV Tele-Talkies Ltd, RB Entertainment Ltd. and Vikatan UTV Content Limited.

Gaming & Interactive Biz:

The games & interactive business reported segment loss of Rs 7.29 crore compared to profit of Rs 4.92 crore in Q2 FY'12 and Rs 10.63 crore in Q3 FY'11. Revenues from the games & interactive business shrunk almost by a third compared to Q3 FY'11 and was down 43 per cent sequentially to Rs 30.69 crore last quarter.

Games and interactive segment comprise the online, console, mobile gaming business and the web & mobile business. UTV games business includes India's largest digital gaming firm Indiagames. Last year, UTV acquired a large stake in its subsidiary from its founder and chief executive Vishal Gondal and two months ago said it has struck a deal to buy out Adobe Systems Incorporated's 6.29 per cent stake in Indiagames Ltd.

Although the deal value stands undisclosed, the agreement for sale has already been inked. If the recent deal is taken as a benchmark, UTV would be paying around Rs 20 crore to Adobe to raise its holding to 92.31 per cent, according to Techcircle estimates. It is also in talks to acquire the balance 7.69 per cent held by Cisco Systems which will make the gaming company a wholly owned arm of UTV.

The firm had last year also disclosed that UTV Games Ltd has acquired remaining 5 per cent stake in True Games Interactive thereby making it a wholly owned subsidiary.

Television & Movies:

The company's television and movies segments(comprising bulk of revenue) also reported deteriorating performance right ahead of the company going for a delisting. The television business saw flat revenues of Rs 103 crore, marginally down sequentially and marginally up over the year ago period. Segment losses at television business was pegged at Rs 37 crore almost 80 per cent more than Q2 FY'12 and as compared to profit of Rs 20.7 crore in Q3 FY'11.

UTV's television segment comprises television content, airtime sales, dubbing services and the television channel broadcast business while the movies segment comprises the film production, distribution and syndication business.

Revenues from movies unit shrunk over 75 per cent over the year ago period and was down more than half compared to Q2 FY'12 to Rs 26.59 crore for the three months ended December 31, 2011. More importantly, the movies unit which was the most profitable business for UTV in FY11 reported segment loss of Rs 18.16 crore compared to profit of Rs 13.92 crore in Q2 FY'12 and Rs 27 crore in segment profit in Q3 FY'11.

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