PROMOTER SALE TO BRING IN THE CAPITAL GROUP COMPANIES AS A KEY INVESTOR Eros announces that Beech Investments Limited ("Beech"), ultimately owned by discretionary family trusts of which Kishore Lulla, Sunil Lulla and Vijay Ahuja, directors of the Company, are amongst the potential beneficiaries, sold 5,485,000 ordinary shares in the Company at a price of 230p per share ("Sale Shares") on 1 February 2013. Following this sale Beech will retain an interest in 76,165,657 ordinary shares, representing 61.3% of the issued share capital of the Company. The purchaser is The Capital Group Companies ("Capital"), one of the world's largest investment management organisations with c.US$ 1 trillion of assets under management. Capital now holds 4.4% of the Company. Jyoti Deshpande, Group CEO & MD of Eros International plc, said, "We are delighted to welcome Capital as a significant shareholder of Eros, joining our other long-term institutional investors. This strategic investment increases the free float of the Company in the near term and demonstrates our shared longer-term vision for value creation in the Company".
11 Dec '12
Many thanks for last 2 posts.Exciting development which turbo charges the company returns...and a NY listing will fully recognise its value.2013 will be transformative.
7 Dec '12
Investec target price upgrade today
Here's Investec's new note with an increased 393p target price: "Eros International (EROS.L) Price: 234p | Target: 393p | Rec: Buy HBO film channel collaboration suggests material long term value accretion, not only given financial upside, but also the link with a blue chip international player, HBO/Warner. Subject to execution, our analysis suggests good share price upside, with even our most pessimistic scenario implying c. 50p value accretion and our positive scenario suggesting over 200p. Our PT rises to 393p (300p) based on our mid-range scenario. Key risks are execution, launch costs and cannibalising existing TV sales. • Potentially game changing long term collaboration with HBO Asia to launch two new premium film channels in India utilising Eros films and content from HBO, Warner and Paramount. This is the first non-advertising funded film channel in India, so should be taken very well in our view. • The HBO/Warner link looks materially accretive to the Eros investment case financially. It could also lead to further joint initiatives and should be a positive affirmation for potential new shareholders if Eros makes its move to the NYSE. • The launch leverages rapid growth in India pay TV as DTH penetration increases and government drives cable migration from (pirated) analogue to more secure digital. This implies premium film content can now be monetised more effectively by pay TV operators - Eros/HBO are well placed. • Forecasts unchanged for now, though new channel launch/TV sales attrition could imply some FY14E launch costs ahead of material premium sub take-up. • Our analysis suggests value enhancement subject to execution - we believe HBO Asia premium channel penetration is c. 25% in other markets. Our DCF scenario analysis is driven by pay TV penetration assumptions (WACC 15%). • Our pessimistic scenario implies pay TV penetration of just 2.2% by FY17E and suggests value accretion of c. 40p. Our mid-range assumption assumes 4% penetration and implies 93p value, while our positive assumption assumes 7.4% penetration and implies value of 196p.
7 Dec '12
Interview re HBO deal
This interview fleshes out the deal even better - note that EROS doesn't have to pay a single rupee to get it going. Selling 44m subs at rs 16 net net to Eros per month would put $160m on their bottom line: http://www.moneycontrol.com/news/business/aiming-rs-500-cr-rev-post-tie-uphbo-asia-eros_791673.html "The beauty of the model is that Eros doesn’t have to shell out even one rupee Kishore Lulla Grp Chmn Eros Eros International Plc has tied up with and HBO Asia to launch two new premium advertising-free movie channels, HBO DEFINED and HBO HITS. Kishore Lulla, group executive chairman, Eros gives the details of the tie up to CNBC-TV18. Lulla says they are aiming to make Rs 500 crore after tieing up with HBO Asia for advertisement free channels. Below is the edited transcript of Lulla's interview to CNBC-TV18. Q: You have tied up with HBO Asia for an ad free channel? A: Yes, we have tied up with HBO Asia for this new channel. Q: What does this mean financially for Eros? Are you shelling out money? What will it mean in terms of costs? A: The beauty of the model is that Eros doesn’t have to shell out even one rupee. We are going to monetise our library and the way our catalogue will hold. So, it’s a revenue share arrangement. HBO Asia has got the biggest library and we are going to launch what HBO is known for premium television at free model and only available on digital subscribers. So, the way India is at the moment, we have 75 million digital subscribers, going up to 175 million digital subscribers in 2016. This will be available as a premium service. It will be similar to the service in US for the original HBO Series as well as the movie premieres (after theater release) on these two channels. Q: What kind of subscriber revenues are you expecting to make from this joint venture and how soon? When is it up on air and will you be making any in FY13? A: We are launching these two channels in the first quarter of 2013. We are looking at anywhere between 2 percent penetration to 25 percent penetration in the next three years. HBO’s penetration level has been always at 25 percent of the addressable home and if they can penetrate to 25 percent of the addressable homes of 176 million in three years, that will be amazing. The model is simple. The subscription will be north of Rs 100. So, after you share about 50-60 percent with the DTH operator or the distribution cost or the digital cable operator, let’s say the collaboration will get about Rs 40 roughly. Out of Rs 40, it has to be divided between the studios providing the content to Eros. So Eros will get about 35-40 percent net after the operating expenses directly to their bottomline. Q: So, that’s a 40 percent in terms of margins in that business? A: Yes. About 60 percent will go to the studios and HBO and 40 percent will come to Eros and there is no capex investment. That is the beauty of
7 Dec '12
HBO deal is massive
The HBO deal is massive. This interview shows that yesterday's RNS is just the start - 500 crore would equate to £60m of revenues per annum. Not bad from a standing start: http://www.moneycontrol.com/news/business/eros-international-gains-2tie-uphbo-asia_791621.html "In an interview with CNBC-TV18, group executive chairman, Kishore Lulla said he aimed Rs 500 crore revenues from these channels in two years. "We will launch 5-6 TV channels with HBO in 2-3 years," he added. Kishore Lulla expects penetration to reach 25 percent in 3 years and is targetting to get 20 million subscribers for 2 channels in 2 years."
6 Dec '12
Content providers dream
Excellent HBO partnership for Eros with such a strong back catalogue of content....and long term earner on future blockbusters.Should excite US market( who value entertainment brands much higher) when 2013 US listing occurs.
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