K Sera Sera-United Media Works merger plan hits a tech hurdle

Industry: Media 2016-08-03

MUMBAI: The proposed merger of K Sera Sera Digital Cinema and United Media Works has run into troubled waters over technology issues.

The two companies had announced a merger in December last year with an aim to become the third-largest digital cinema player in the country after market leader UFO Moviez and Real Image Media Technologies. The two companies had also said that together they would invest Rs 100 crore in order to increase the market share.

The merger never took off, people familiar with the matter said on condition of anonymity .

“For a couple of months there were talks about the merger, but then these died down. The deal seems to be put on an indefinite hold,” said an executive from a cinema distribution firm.

United Media Works joint managing director Ashish Bhandari told ET, though, that the deal is not dead.

“We are trying to revive the deal and evaluating various options. We had to put it (merger) on hold because when we started working on it, we realised that the technology that both of us use are very different and merging them will mean that one firm will have to go offline for some time,” Bhandari said.

With films releasing every week, going offline is not an option, Bhandari said. “We have to release films every week or else we will lose those screens to competitors,” he said.

Had the merger gone through, the new entity would have had slightly more than 5 percent market share with 600 digital screens. The aim was to integrate the full operations and technology of the two companies and use their combined energies to develop and consolidate their market position.

KSS’ Satish Panchariya was to be the chairman of the new company while Bhandari was named the managing director. K Sera Sera Digital Cinema is a subsidiary of publically listed KSS.

K Sera Sera Digital Cinema and United Media Works had also announced plans to invest Rs 100 crore over two to three years to build a scalable digital cinema technology and on-ground servicing. They were aiming to capture 25 per cent market share with a presence in 2,000 screens across India over the next two years.

“What the two companies tried was a desperate move as between UFO Moviez and Real Image over 90 per cent of the market is covered. KSS and UMW hurried into announcing a merger without doing a proper due diligence, which is why the deal has failed,” another distributor with direct knowledge of the deal said.