Overseas investment

In its effort to become India's 'the Universal Studios of India' the Chennai-based animation major Pentamedia Graphics is, besides going global, venturing into entertainment segment. It recently acquired three domestic companies engaged in media, studio, web and theme entertainment. In addition three more overseas acquisitions are planned.

The three domestic acquisitions are: Media Dreams, Kirsh Srikkanth Sports and Entertainment and Mayajaal, all based in Chennai. Advised by SBI Capital Markets, Pentamedia will be paying a total consideration for these companies at Rs. 175.95 crore by allotting 8.8 per cent of its existing equity at a value of Rs. 490 a share. A steal for the company, considering that its shares are currently changing hands at stock exchanges at around Rs 285 a share (as on 26 December 2000).

Speaking about the acquisitions Mr. K. Srinivasan, director and chief operating officer of the company says, "Media Dreams is a three-year-old full fledged entertainment business unit catering to television, theatre and Internet. The Company has over 500 hours of programming content in Tamil, Telugu, Hindi and other regional languages distributed to various leading satellite channels."

Valued around Rs. 50 crore by SBI Capital Markets, Media Dreams recently created waves with its debut Tamil movie, Bharathi, which has been nominated for the National Award. Besides other projects under execution, Media Dreams is also said to have the rights for more than ten film scripts in various languages for production. It is also planning to enter, in a big way, the post-production arena of film making by taking up distribution of national and international films. Besides, the television programs produced by Media Dreams enjoy very high television rating points and are beamed at prime time in most leading television channels.

Pentamedia's second acquisition, Krish Srikkanth Sports and Entertainment, was valued at an estimated Rs. 60 crore. Promoted by former Indian cricketer, the swashbuckling Mr. Krishnamachari Srikanth, the venture, which specialises in sports related entertainment and other media entertainment, has over 300 hours of specific sports content. Its sports content is being supplied to leading television channels and Internet companies. It is also in the process of implementing a "sports village" that will host a cricket stadium, golf course, tennis courts to name a few.

Analysts believe that the price of Rs. 60 crore paid for this acquisition is on the higher side considering that its content is largely cricket-oriented, which has very little following in major Asian countries where Pentamedia's television venture, NumTV, is planning to beam. It would be interesting note how Pentamedia would churn out profits out of this acquisition.

On the other hand Pentamedia's third acquisition, the two-year old Mayajaal is involved in complete theme family entertainment. The entity is not new to Pentamedia since it has been offering consultancy on theme entertainment to Mayajaal for some time now. Its consultancy is in the areas of virtual reality systems, digital technology and animatronics.

Mayajaal is a unique park set on an expanse of 70 acres at Kannathur, situated along the East Coast Road at Chennai. With a built up area of around 100,000 sq.ft., it hosts a series of variety entertainment like bowling alleys, six multiplex theatres, food courts, video parlours, games hubs, browsing nodules, shopping malls and other theme entertainment for a heterogeneous population.

The acquisition valued at an estimated Rs 65 crore also gets Pentamedia , Hotel Whales a 10-acre beach resort at Silver Sands situated close to the famed Mahabalipuram. A virtual underwater and water sports are being planned there.

At a time when companies are focussing on their core competency why is Pentamedia branching off into entertainment segment instead of focussing on animation and special effects, the company's core strength?  "This is a logical extension. The digital assets we create is the platform on which others run their business. And we decided to enter those segments by ourselves," remarks an official.

Adds Mr. Srinivasan, "It is not like a tyre company deciding to venture into vehicle manufacturing as it finds that all the vehicles use tyres for a smooth run. We are putting into use the digital assets created by us in several profitable avenues. One such avenue is theme parks."

The three acquisitions apart, the board of directors of Pentamedia Graphics has given an in-principle approval to acquire 2,000 films from G.V. Films India for a consideration of Rs. 4.41 crore and 450 titles of Amar Chitra Katha {the famed fables books for children} for around Rs.9 crore from India Book House (India).

Overseas investment

In the overseas arena, Pentamedia is considering investment or joint venture opportunities in four companies viz. US-based Digital Domain Inc (not exceeding US$ 10 million), US-based Thornbush ($ 3 million), Canada-based Studio 345 ($ 1.5 million) and US-based Purple Drop Inc ($ 5million).

While Digital Domain is a special effects company, Thornbush, Studio 345 and Purple Drop Inc are involved in distribution and live action, 2D/3D production and games and merchandising respectively. Pentamedia Graphics is also considering the acquiring the digital assets from various Companies across the world.  

Meanwhile Film Roman Inc, the company in which Pentamedia Graphics acquired a 51 per cent stake for $15 million cash is in the process of getting delisted at Nasdaq as its scrip is quoting sub $1 for quite sometime. It is learnt that Pentamedia Graphics is likely to renegotiate the purchase price with the promoters of Film Roman. Mr. Srinivasan is not perturbed about Film Roman getting delisted. "Once the company turns around we will again get it listed," he remarks. Last quarter Film Roman reduced its losses substantially and is expected to be in the black soon.