The Hindu Business Line : Funding brightens the picture for PVR

The infusion of funds by private equity players ICICI Ventures and JP Morgan Global Special Opportunities in PVR’s production and distribution business will help the multiplex operator strengthen its links across the movie value chain.

About Rs 120 crore will be pumped into PVR Pictures, PVR’s subsidiary.

The press release does not disclose the stake that each player will get in the company. This makes it difficult to estimate value for the subsidiary. However, the entry of private equity players does make the potential for value unlocking in the subsidiary a possibility, although it is a distant one.

From a business perspective, the capital infusion will help PVR scale up its presence in the production and distribution business. Being present across the value chain is becoming increasingly important for multiplex operators as it improves bargaining power.

Access to funding, emergence of multiple revenue streams and increasing popularity of co-productions has made for easier survival in the movie production business.

However, other multiplexes are also treading along the same path, intensifying competition. Adlabs and Pyramid Saimira have already built a sizeable presence in this business.

Early success

PVR Pictures’ first co-production with Aamir Khan “Taare Zameen Par” was a runaway hit. The early success has probably inspired confidence in the company’s ability to operate in the risky business of movie production, amid competition.

PVR Pictures has also distributed popular Hollywood and Bollywood titles recently.

The proceeds would help fund content acquisition costs, which have been on the rise on the back of increasing competition.

With PVR Cinemas being present in six of the nine distribution territories and still expanding, PVR Pictures already has a platform to distribute its in-house productions and acquired titles.

PVR Cinemas is estimated to account for nearly 15 per cent of overall box office collections.

If the company manages to make greater strides in the production and distribution business, it could mean better valuations for the stock in the long-term.

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