Viacom18 in bid for Indian Film Co.

Acclaimed but faltering producer listed on London's AIM

NEW DELHI -- Viacom 18 Media Pvt Ltd, an equal joint venture between Viacom Inc. and Network18, is looking to buyout The Indian Film Company.

Founded as a specialist film investment entity, TIFC - which has a market cap of $34.5 million (£22.8 million) - was listed on London's Alternative Investment Market in June 2007 where it raised $83.4 million (£55 million) to fund its portfolio of films which included recent Indian arthouse release “Road, Movie” and British director Gurinder Chadha's latest “It’s A Wonderful Afterlife.”

Network 18 Media & Investments and its affiliates own over 80% of TIFC and the firm has agreed to sell its stake in the proposed offer by Viacom18.

“As part of the company's planned expansion in the entertainment space and acquisition of synergistic content, Viacom18 is contemplating making the offer,” the company said in a release to stock exchanges on Monday, adding, “This possible offer is in the process of being formulated and subject to a number of pre-conditions, will only be made if and when all such pre-conditions are satisfied and will be made in full compliance of the U.K. Takeover Code and other regulations.”

When contacted, Viacom18 did not give further details as to a timeframe for the acquisition. But analysts expect Viacom18 to acquire TIFC's 19.4% free floating shares, while Network18's holding of 80.4% could be an all-cash deal.

Following the takeover, TIFC is expected to be de-listed from AIM.

When launched, TIFC tasted initial success, distributing successful films such as “Jab we Met,” “Welcome,” and “Golmaal Returns.”

But the current financial year saw TIFC deliver a string of poor performers at the boxoffice, including “Shortkut - The Con is On,” “Luck,” and “Life Partner.”

For the financial year ending March 2010, TIFC recorded a net loss of $6.9 million compared to a net profit of $5.89 million in the previous year. Its net asset value at 115.56 pence per ordinary share was also 1.5% lower compared to a year ago. TIFC has committed to invest $20.3 million in future film projects.

Viacom18's acquisition of TIFC is seen as a strategic move to enhance its content pipeline, as the joint venture runs successful Hindi entertainment channel Colors, in addition to its bouquet of channels that include MTV India, Vh1 India and Nickelodeon India.

Network18 also runs its movie production banner Studio18.

TIFC has also seen a recent management restructuring that saw the resignation of CEO Sandeep Bhargava, leaving CFO Manish Thukral to takeover as interim-CEO.

In March, one of TIFC's founding team members, senior VP, marketing, distribution and syndication, Priti Shahani resigned and recently joined Reliance Big Pictures as head of strategy and marketing.