UTV holds back TV growth in India

Disney partner cuts back expansion

Disney’s Indian entertainment partner UTV Software Communications is cutting back expansion of its TV broadcasting biz in anticipation of an economic slowdown.

It will phase out its Delhi office, where World Movies and UTV Movies channels are based, and consolidate its four TV nets into a facility in Mumbai, which is already home to youth channel Bindass and Bindass Movies.

UTV will also cut capital expenditure by 2 billion rupees ($41 million) and limit investment to no more than $20 million above the initial $74 million made by Disney and parent UTV.

Cuts, announced Monday follow a “very sharp review” conducted over the past 60 days. Although UTV describes the broadcast sector as its only division in “serious investment mode” the company did not signal such pain when it unveiled interim results three weeks ago.

In addition to lower capital expenditure, cuts are expected to include lower carriage fees and reduction of overhead costs that may include job losses.

UTV now says division’s losses in this year should not exceed $3 million and $5.13 million next year, before breaking even in the 2010-11 financial year. That is two years ahead of schedule.

The company has previously warned that it expects advertising revenues to drop by 15% in the current year.

In a statement to the Bombay Stock Exchange, UTV said the group remains on track to end the financial year without change to its growth forecasts.

The economic slowdown has not hit the movie divisions, which have had their best ever year, according to the statement. “We have managed to continuously increase our movie slate.”

Gaming, new media and TV content businesses will “end the financial year as per our growth projections,” statement said.

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