Dec 27, 2009 0
FT joins us in a merry joyride on new years eve
Sep 9, 2009 0
Posted on September 9, 2009. Filed under: Financial Markets, Global, TARP, US | Tags: Meltdown, RBS, AIG,Insurance, Aircraft Leasing, ILFC | Edit This
As the world’s largest Aircraft Lessor, ILFC is still in play with a mountain of debt which was $17 billion even 12 months ago. ILFC and General Electric Co.’s GE Commercial Aviation Services, the world’s largest aircraft-leasing firms, are the biggest customers for aircraft makers including Airbus SAS and Boeing Co. ILFC, founded 36 years [...]
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Posted on August 25, 2009. Filed under: Financial Markets, Meltdown, Obamanomics | Tags: AIG,Insurance, Insurer, NYLife, Obamanomics, recession, US, WSJ | Edit This
The New York Life Insurance Company, 9th till last year, jumped to No. 2 in market share behind Metlife with a near 6% market share in Life taking a leaf out of the book of the World’s best. AIG dropped just 4 places in the whole melee of the stimulus and this continuing depression. New [...]
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Posted on August 18, 2009. Filed under: Financial Markets, GDOW, Global, Investments, Obamanomics,TARP, US | Tags: Acquisitions, AIG, Asia, Credit Crisis, Financial Markets, Fire Sale, Insurance, Investments,Liquidity Crisis, Meltdown, Private Equity, Sell off, Venture Capital | Edit This
zyakaira notes: The Taiwan Life unit: The recent laundry list of asset sales planned by AIG see here continues to find conflict of interest in almost each of its deals, as AIG remains the buck stopper of the entire industry’s claims good or bad..
Bloomberg reports that Morgan Stanley’s (NYSE:MS) private equity fund pulled out [...]
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Posted on August 17, 2009. Filed under: Bank Stocks, Infrastructure, Investments, US | Tags: 2009, AIG,Financial Markets, Global investing, Hedge Funds, Insurance, M&A, Meltdown, Private Equity, Restructuring,TARP, US | Edit This
AIG is in quite a turn having to sell most of its profitable Asian and other International Insurance and Investment Management Businesses ( also see here)
While it announced the division of its businesses into AIA + Alico in Life in Asia, Chartis for Property & Casualty and the Domestic US insurer, it has not gone [...]
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Posted on August 7, 2009. Filed under: Financial Markets, GDOW, TARP, US | Tags: 2008, 2009, AIG,Meltdown | Edit This
AIG will soon be a domestic insurer if the planned three way split comes through to let the company return Federal funds as it has already spun off its International insurer AIA. In related news, all top four investment bankers are involved in this break up and sale of AIG. The current scrip (closing at [...]
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Posted on July 24, 2009. Filed under: Bank Stocks, Financial Markets, Global, Real Estate, US | Tags:Amazon, Amitonomics, Bank Stocks, China, DealBook, Financial Markets, Infrastructure, Retail Lifestyle,Socialpicks, Stock Markets, The Invisible Continent, Twitter, US | Edit This
Do remember to validate picks at http://socialpicks.com/zyaadakairaada/portfolio $AMZN is down 8% as we speak
Facebook at 77 million visitors, Amazon 64 m, Craigslist at 47 m, WordPress at 26m and Twitter at 20m compared to Goog at 157m in June09
about 2 hours ago from TweetDeck
So $AMZN makes $1.75 bn per month from 64 million visitors
5 minutes [...]
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Posted on July 13, 2009. Filed under: Healthcare, Obamanomics | Tags: 2009, Barack Obama, Economy,GS, Healthcare, Healthcare Reform, Healthcare Tax, Obama, Obamanomics | Edit This
WASHINGTON (MarketWatch) — House Democrats intend to pay for their health-care reform plan with higher taxes on wealthy Americans.
A tax on the wealthy is the “best way” to raise money for the overhaul, Rep. Charles Rangel, the New York Democrat who is chairman of the House Ways and Means Committee, told reporters late Friday.
The House [...]
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Posted on July 9, 2009. Filed under: Bank Stocks, Financial Markets, Investments, Meltdown, US | Tags:Acquisitions, Amitonomics, Bank Stocks, Citi, Financial Markets, Global investing, M&A, Meltdown | Edit This
American International Group Inc AIG.N, the insurer rescued by a series of federal bailouts, may have zero equity value due to the risk of more credit default swap losses and the disposal of key assets at low valuations, Citigroup said.Shares of the company fell 22 percent to $10.22 in early trade Thursday on the New [...]
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Aug 26, 2009 0
India’s energy situation in short is that it needs four times more oil than it produces, and thus domestic production has been a focus in India’s Infrastructure story since 2005
The OIL IPO band at Rs 950-1050 just ensures an IPO size of Rs 5000 Crores ($1.02 billion) from 11% new shares and 10% sale of existing stakes of the Government, thus bringing the post issue government stake to 78%, very close to the ideal target of 75% promoter stake for listed companies and allowing the government to take down further ownership at a later stage based on market determined prices. The government will further sell another 10% of its stake to IOC (5%), BPCL and HPCL. The IPO monies would thus finance the company’s Capex requirement for the next 2 years across its exploration contracts in Assam, Rajasthan ( new fields in management contract with Cairn – the first Production Sharing Contract) and even its overseas bids in Libya and Venezuela, not the ones in Nigeria.
OIL is the newest entrant in India’s energy story, following on the footsteps of ONGC Videsh and ONGC while it has purportedly on paper, more market friendly organization values and has reserves of $500 billion in the new NEPC VI fields. However, It has relinquished interest in North Cachar and other Assam fields award in 2004.
In keeping with India’s Infrastructure story’s imperatives and as per the ever increasing financing gap of $384 billion at 2005 prices and $475 billion at current prices (as per EGOM estimates, India Infrastructure Report 2008, IDFC, 3i network) the issue has been super-sized. Unfortunately SEBI has still not uploaded any revised prospectus/offer document since the last one was filed for an issue half the size in December 2007. Since then, while India’s Oil subsidy bill has soared to over INR 100000 crores for both 2008 and 2009, OIL has managed its exploration and distribution activity safely to become profitable and is looking to fund the completion of its exploration projects through this issue.
OIL will be critical to the FTSE India Infrastructure 30 index introduced in 2007 and ETFs around the same will be in high demand once the listing of these shares is completed as Institutional appetite for Indian public sector infrastructure stories will continue to be robust for the more than $10 billion to be raised in the six months since July 2009 and another $20 billion that may be raised in 2010.
With Oil prices currently ruling at $70-75 and OPEC targeting an increase to $100, we are back in an inflationary situation where exporting 20% of our domestic reequirment though cash accretive is still not enough to bring down our costs, while increasing our domestic production remains slow and torturous. OIL remains immune to the imbalance however and will be free to purchase and sell at market prices using more efficient trading mechanisms than currently practiced by the consequent coalitions and thus its financials are likely to be strong. However, they are unlikely to be on par with a private sector Cairn Energy or Reliance in terms of these efficiencies. OIL does share the subsidy bill as under recovery, but it is still likely that because of it being a new corporate, itwill suffer only minor losses on the said account and IOC and HPCL wil maintain primacy with regards to paying the bills 
The LNG/LPG situation however in the market today can be easily capitalized by OIL, where neither $4.20 or $2.34 is a fair price, global markets ruling currently at $3.45 ( mid-August 2009) It has reserves of 77 billion cu. mtrs of Gas including contingency reserves primarily in the Rajasthan basin
Also, it had initially suffered losses in production in the Dikom fields with 2007 production being 2.23 million barrels, less than half of its 1999 production. Still, in the face of global competition it has secured 21 of the 46 fields awarded by the government till date under NELP. The Rajasthan fields that it operates under PSC cover nearly 4000 sq. kms. They are a first step in diversification of OIL’s over dependence on Asssam and the single 1220 km pipeline from the terrorist infested areas there in. Of its last known turnover of $1.2 billion, costs include 20% royalties for crude oil and 10% royalties for natural gas and offshore oil, and underrecovery from crude supplied to public sector refineries which is 80% of the company’s revenue. they also pay approx 5% of this revenue to the Assam government in taxes on oil bearing land. Apart from owning the pipeline from Assam ( 44 million barrels in 2007) it also owns 26% in NRL and 10% in BCPL refineries. the current Capex includes exploratory wells and 2D and 3D seismic data acquisition in the fields being developed of the 38000 sq kms awarded to OIL till date ( 75% thru NELP )
[Tags India, India Infrastructure, IPOs, OIL, ETF, EEM, Emerging Markets, Russia, China, Energy]
[Category India, India Infrastructure]
Aug 19, 2009 0
The recent laundry list of asset sales planned by AIG (see here) continues to find conflict of interest in almost each of its deals, as AIG remains the buck stopper of the entire industry’s claims good or bad..
Bloomberg reports that Morgan Stanley’s (NYSE:MS) private equity fund pulled out of the bidding group Chinatrust Financial Holding Co. is leading. Morgan Stanley’s private equity fund apparently dropped out of the bidding due to a perceived conflict of interest because Morgan Stanley is advising and funding costs for AIG and the sale of the Nan Shan Life Insurance Co. auction along with Blackstone Group LP (NYSE:BX). Morgan Stanley owns 9.9% of Chinatrust.
So is Chinatrust still in the bidding? It was in a bidding group that also included Bain Capital LLC and Oaktree Capital Management LLC, according to the Bloomberg report. Reuters reports that Chinatrust may still ready to bid.
“We are capable of running Nan Shan,” said chief investment officer Daniel Wu in response to questions from reporters. “But I’m not going to say if we have an interest (in acquiring it) or anything else.”
The sale of the unit is expected to bring in about $2 billion, but it could have trouble hitting that price target as the unit is under as much financial pressure as its parent. Nan Shan was forced to raise $1.45 billion in a rights offer last year to avoid slipping below a regulatory capital requirement as unprofitable policies eroded its reserves.
So who else is in the bidding for the unit?
Carlyle Group, which joined Fubon Financial Holding Co.
Cathay Financial Holding Co.
China Strategic Holdings Ltd. may have joined Primus Financial Holdings Ltd.
Binding offers are due for submission on Aug. 28, according to the reports. – Maria Woehr
via Morgan Stanley, ChinaTrust to drop AIG unit bid? (Dealscape – Private capital).
Aug 17, 2009 3
AIG is in quite a turn having to sell most of its profitable Asian and other International Insurance and Investment Management Businesses ( also see here)
While it announced the division of its businesses into AIA + Alico in Life in Asia, Chartis for Property & Casualty and the Domestic US insurer, it has not gone much further. Till date it has sold the following:
1. Energy & Infrastructure Assets for $1.9 billion : A power generation plant operated by First Energy, a tax equity interest in a Texas wind farm and two lease equity interests in rail car portfolios. Earlier the AIG financial products unit sold an interest in Tenaska Marketing Ventures, its interest in two volumetric production payment transactions and its stake in three Spanish solar power plants
2. Hong Kong based Consumer Finance Unit for $627 million
3. AIG Systems Solution, its IT Outsourcing Unit sold to Mphasis (800 staff would have easily netted $35-50 million but not more than $75 million with all premium) which is likely small change of Rs 225 crores
4. It has earlier sold its Canadian Life subsidiary for $308 million and its Aircraftleasing business ILFC is expected to fetch less than $2.2 billion (assets worth $7 billion)
5. Its Life Insurance Premium Finance business was sold to Wintrust Financials (Ill.) for upto $740 million
According to Businessweek in a report published on Sept. 23, 2008, the Credit Suisse Group (CS) put an aftertax value on AIG’s assets at anywhere from $94 billion to $122 billion. The final tally will depend on how big a “distressed discount” it will face.
It is trying to sell the following for which deals are in process:
A. AIG Investments ( see article here) Earlier proposed to be bought by Franklin Templeton and Temasek, they are still being tracked by Crestview partners and Religare Enterprises of the erstwhile pharma major Ranbaxy. This sale will net at least $300 million, while AIG is likely holding out for $500 million for $80 billion AUM. AIG Investments has lot of fresh investments in Africa and Latin America (private Equity funds)
B. The Global Real Estate Management Business with $12.4 billion in assets and $5.2 billion likely has suitors for $9 billion including the AIG and TARP advisors Blackstone(BX) and Blackrock. According to the dealcom, the Japanese HQ itself is worth $1 billion
C. The AIA and ALICO IPOs could net $25 billion including purchases by Benmosche’s erswhile Metlife, for which Benmosche will have to clear conflicts of interest ( by staying away from negotiations?) . Benmosche owns about 2.5 million diluted equity ( incl options ) of Metlife
D. Private Equity boutiques like Lightyear have shown interest in AIG advisors. Surprisingly, no such interest from the PE firms has come in AIG Global Investments. AIG ADvisors includes AIG Retirement Advisors ( Sage, FSC and Royal Alliance) which has lost 1 in 6 of their Advisors. As is the norm, most of the first bidders including Warburg Pincus have retreated, and the situation is very tense
E. Chartis carved out of all of AIG’s P&C business desires to sell a 20% stake through IPO
F. The Taiwan Life unit: The recent laundry list of asset sales planned by AIG see here continues to find conflict of interest in almost each of its deals, as AIG remains the buck stopper of the entire industry’s claims good or bad.. also this unit (Nan Shan was out of cash earlier last year)
Though some of the initial deals have gone well, each of these deals seem likely to be pie in the sky w.r.t valuations and AIG faces a challenging task ahead.
On the other hand it has been stuck with proposals to sell $20 billion worth of AIA and ALICO Life Insurance in Asia, and another 20% in its restructured Chartis business (P&C) and is not likely to get a price that will pay off the expected debt out of the $80 billion outstanding. They have however made proprietary profits to pay off $2.67 billion in the 2nd Quarter, which is not much considering its global assets in life are $560 billion !!
references via thedeal.com
Aug 7, 2009 0
AIG will soon be a domestic insurer if the planned three way split comes through to let the company return Federal funds as it has already spun off its International insurer AIA. In related news, all top four investment bankers are involved in this break up and sale of AIG.
It’s part of AIG’s master plan, known as ‘Project Destiny,’ which aims to repay a big chunk of the $82 billion in loans owed to U.S. taxpayers.
AIG is breaking off three huge subsidiaries: Its property-casualty business, recently renamed Chartis; Southeast Asian life insurer AIA; and foreign life insurance unit ALICO. Chartis was spun off last week, but its shares will be not be sold to the government.
The current scrip (closing at $22.53 yesterday) is the result of a reverse split of 1:20 preventing a penny stock tag for a stock that was ‘once the pride of the nation’. AIG also does not have a very clear corp governance record till date, making short term arrangements with Liddy and Greenberg both regularly answering charges and stepping out
In June 2009, Revenue jumped 48% to $29.53 billion.
Operating income at AIG’s general-insurance business dropped 19% on a decline in underwriting profit, while net premiums written fell the same amount. Combined ratio, or the portion of premiums paid out on claims and expenses, rose six percentage points to 98.2%.(precarious, the true income stream as it may not dabble in other income enhancing trades now)
Meanwhile, the life-insurance and retirement-services segment’s loss narrowed sharply as the company said it had a difficult but improving operating environment. The investment assets as of Q1(Mar 2009) amounted to $560 billion and even a 10% loss on these largely policy liabilities, could wipe off the company
AIG now reports a profit of $2.57 per share at $4.57 billion, taking Equity up to $58 billion
On Monday, Robert Benmosche, the former chairman and chief executive of MetLife Inc. (MET), will step in as AIG’s new chief executive, and new director Harvey Golub, formerly chief executive of American Express Co. (AXP), takes over as non-executive chairman. Edward Liddy, who took both roles in September after AIG’s first bailout, will step down.
AIG’s maximum risk on a separate book of swaps sold to European banks narrowed to $177.5 billion as of June 30, compared with $192.6 billion at the end of March. The insurer said in June that declines in the value of assets tied to the swaps could have a “material adverse effect” on results and that the risk of losses on the derivatives may last “longer than anticipated.”
This risk can still wipe out equity in the next 4 quarters unless the bad assets are separated from the conglomerate. It also has had initial hiccups in selling off its Asian businesses though it will complete a couple of sales in Taiwan life insurance in the next few days The Government holds $8 billion equity in the newly formed AIA
European Swaps
The average weighted length of the swaps protecting residential loans is more than 24 years, while the span tied to corporate loans is about 7 years, the company said.
The government’s rescue includes a $60 billion credit line, $52.5 billion to buy mortgage-linked assets owned or insured by the company, and a Treasury investment of as much as $70 billion. AIG agreed to turn over a stake of almost 80 percent as part of the initial bailout, diluting private shareholders.
AIG – which is 80% owned by the U.S. government following its rescue of the company last September – posted income of $1.82 billion, or $2.30 a share, compared with a year-earlier loss of $5.36 billion, or $41.13 a share. Excluding capital losses and other items, earnings were $2.57 a share, compared with a prior-year loss of $10.15 a share.
Data courtesy Bloomberg, WSJ and other results announcements
Sphere: Related Content
Aug 7, 2009 1
AIG will soon be a domestic insurer if the planned three way split comes through to let the company return Federal funds as it has already spun off its International insurer AIA. In related news, all top four investment bankers are involved in this break up and sale of AIG. The current scrip (closing at $22.53 yesterday) is the result of a reverse split of 1:20 preventing a penny stock tag for a stock that was ’once the pride of the nation’. AIG also does not have a very clear corp governance record till date, making short term arrangements with Liddy and Greenberg both regularly answering charges and stepping out
In June 2009, Revenue jumped 48% to $29.53 billion.
Operating income at AIG’s general-insurance business dropped 19% on a decline in underwriting profit, while net premiums written fell the same amount. Combined ratio, or the portion of premiums paid out on claims and expenses, rose six percentage points to 98.2%.(precarious, the true income stream as it may not dabble in other income enhancing trades now)
Meanwhile, the life-insurance and retirement-services segment’s loss narrowed sharply as the company said it had a difficult but improving operating environment. The investment assets as of Q1(Mar 2009) amounted to $560 billion and even a 10% loss on these largely policy liabilities, could wipe off the company
AIG now reports a profit of $2.57 per share at $4.57 billion, taking Equity up to $58 billion
On Monday, Robert Benmosche, the former chairman and chief executive of MetLife Inc. (MET), will step in as AIG’s new chief executive, and new director Harvey Golub, formerly chief executive of American Express Co. (AXP), takes over as non-executive chairman. Edward Liddy, who took both roles in September after AIG’s first bailout, will step down.
AIG’s maximum risk on a separate book of swaps sold to European banks narrowed to $177.5 billion as of June 30, compared with $192.6 billion at the end of March. The insurer said in June that declines in the value of assets tied to the swaps could have a “material adverse effect” on results and that the risk of losses on the derivatives may last “longer than anticipated.”
This risk can still wipe out equity in the next 4 quarters unless the bad assets are separated from the conglomerate. It also has had initial hiccups in selling off its Asian businesses though it will complete a couple of sales in Taiwan life insurance in the next few days The Government holds $8 billion equity in the newly formed AIA
European Swaps
The average weighted length of the swaps protecting residential loans is more than 24 years, while the span tied to corporate loans is about 7 years, the company said.
The government’s rescue includes a $60 billion credit line, $52.5 billion to buy mortgage-linked assets owned or insured by the company, and a Treasury investment of as much as $70 billion. AIG agreed to turn over a stake of almost 80 percent as part of the initial bailout, diluting private shareholders.
AIG – which is 80% owned by the U.S. government following its rescue of the company last September – posted income of $1.82 billion, or $2.30 a share, compared with a year-earlier loss of $5.36 billion, or $41.13 a share. Excluding capital losses and other items, earnings were $2.57 a share, compared with a prior-year loss of $10.15 a share.
Data courtesy Bloomberg, WSJ and other results announcements
Jul 28, 2009 0
Europe Issues New Bank Guidelines
zyakaira notes: These common rules specify stress tests for the 30 that have received state aid. Also they emphasize the fact that this aid must stay on the books to be of any value and not immediately used to save falling/defaulted bonds. All in all, it looks good on paper and barring any unforeseen bickering by the nation states individually as BoE and maybe a few others may prefer, these would set a nice denominator. From my side I would recommend that the best and worst case be not used to skew results and be used in a fair range, which should be eminently possible in 6 months
BW:
To even out different requirements imposed on banks that have received government aid, the European Commission has set forth common rules
The European Commission laid out new guidelines for banks receiving government support on Thursday (23 July) in order to avoid distortions of competition within the sector.
Since the fall of Lehman Brothers last September, roughly 30 banks within the EU have received state aid to keep them afloat on condition that a restructuring plan be submitted within six months.
But banks will have five years to implement their plans, an indication that the commission still considers the current climate extremely difficult.
Philip Lowe, the commission’s director-general for competition, said the guidelines were “the ultimate stage in restoring health to the banking sector…which is done by returning individual institutions to viability without state aid.”
He cautioned that state aid could not be provided so that banks could continue with a “failed business model.”
Instead, the restructuring plans must take account of “the present state of and future prospects of financial markets, reflecting best-case and worst-case assumptions,” say the guidelines, which will remain in place until 31 December 2010.
via Europe Issues New Bank Guidelines – BusinessWeek.
Jul 25, 2009 0
THIS WFC PICK WAS MADE ON 01/25/09 and has performed beyond expectations with a 50% return
Carolinas and Phils have both been handed over to Wachovia guys. That is a very positive sign for this rodeo. The acquisition is being handled much better than the one by BAC as on date. The following is from strtribune.com of the 17th January 2009 The CEO of Wells Fargo & Co., now the nation’s fourth-largest banker, said Friday the bank has ample capital and has grown its loan portfolio by about 20 percent in the past year as it has taken business from weaker competitors in the beleaguered financial services industry.
The brass at Wells Fargo, which recently acquired capital-short Wachovia Corp, the North Carolina institution that operates in the Southeast, also said they believe they can pull off a successful merger similar to that of the Minneapolis-based Norwest buying larger Wells Fargo a decade ago. “I like this deal more than I did at first,” said Wells Fargo CEO John Stumpf, 55.
“This is not our first rodeo. This can be a wonderful long-term deal for our shareholders. We think we’re building something for the ages.” Stumpf’s optimism, however, did not temper a bad day on Wall Street for the financial services industry. Shares of Wells Fargo and other major players swooned as Bank of America and Citigroup, two of the industry’s once-proud performers, announced a combined $10 billion in fourth-quarter net losses on credit and other woes. Meanwhile, the federal government has redoubled its efforts to support a financial system that has shown few signs of recovery despite massive capital injections and restructuring in recent months.
Jul 25, 2009 0
zyakaira notes: Volkswagens unlikely to fall for an extra EUR 5 Billion in cost and the Prosche owners have to cough the added debt in this week itself!
Deutsche Bank (DBKGn.DE) CEO Josef Ackermann has told Porsche’s (PSHG_p.DE) owner families of the urgency to stump up cash in order to pay down the company’s debts, which have risen to 14 billion euros ($19.88 billion), a German magazine said on Saturday. Ackermann himself told Porsche supervisory board chairman Wolfgang Porsche that a mere capital increase from the Porsche and Piech families would not be sufficient to pay for the carmaker’s financial obligations, a pre-release of Der Spiegel said, citing banking sources. The debts include some bonds that needed to be paid, it added. Porsche on Thursday agreed it would increase its capital by at least 5 billion euros ahead of a planned integration with Volkswagen (VOWG.DE). A Porsche spokesman told Reuters he could not confirm the 14 billion euros figure. He said Porsche’s net debts total around 10 billion euros. In January, the total was around 9 billion euros. via Porsche told by Deutsche Bank to pump in cash quickly: report | Reuters
| DJIA | 10564.38 | ||
| NASDAQ | 2340.68 | ||
| S&P 500 | 1140.44 | ||
| ^TWII | 7770.59 | ||
| ^AORD | 4822.50 | ||
| EEM | 41.21 | ||
| PGX | 14.03 | ||
| PBR | 45.78 | ||
| KKE | 0.00 | ||
| YESBANK.NS | 249.15 | ||
| PFE | 17.23 | ||
| HDB | 126.95 | ||
| RECLTD.NS | 236.40 | ||
| HBC | 52.70 | ||
| ADBE | 35.12 |
Archive for Facebook vs Twitter »Can conventional media survive yet?
The proposed $30-billion transaction is the fruition of a longtime ambition by Comcast’s 50-year-old chief executive, Brian Roberts, to recast his family-controlled Philadelphia company into a leading producer of movies and television shows and a purveyor of prominent cable and broadcast networks, including the venerable NBC.
Under terms of the deal, Comcast will contribute its entertainment channels, including E and Versus; nine regional sports networks; and about $6.5 billion in cash in exchange for 51% of the new venture, which will continue to be called NBC Universal for the immediate future.
The deal underscores how cable television — not a broadcast network or a Hollywood movie studio — has become the new profit center for media conglomerates.
GE, which has owned the NBC network for 23 years, will reduce its ownership in the company to 49%. The deal sets up GE for a gradual exit from the entertainment business, granting Comcast the right to buy out GE’s interest within eight years. GE placed a value of $30 billion on its NBC Universal businesses.
ADA Reliance (BIG entertainment) has today announced details of its venture with Dreamworks (Steven Spielberg) planning a 40% stake in the final entity capitalised at approx $830 million ($1b at USD rate of Rs. 40) with Disney holding another 15%. The Company holds a target of producing 5-6 films a year. BIG already has agreements with Nicholas Cage’s Saturn, Jim Carrey’s JC23, George Clooney’s Smokehouse, Chris Columbus’s 1492 Pictures, Tom Hank’s Playtone and Brad Pitt’s Plan B among others
Posted via email from The investment blog on Post
As recession-weary Americans flock to the cinema, Hollywood has had good fortune in a year when most other industries are fighting for survival. According to Box Office Mojo, theatrical receipts are tallying close to 12% ahead of 2008. But which studios have lured moviegoers into theaters in this recession, and how can you turn a profit with them?Studios like Warner Bros. and Paramount are outperforming expectations, jam-packing the summer movie season with anticipated blockbusters. However, the real success seems to be coming from small and mid-size films. Warner Bros., a unit of Time Warner TWX – news – people , saw its comedy The Hangover pass the $180 million mark, and if it follows the path of Wedding Crashers, a comparable R-rated comedy, it could end up making north of $225 million by the time its out of theaters. What makes The Hangover all the more impressive as a moneymaker is that it was made on the cheap–by Hollywood standards–for a mere $35 million.
via A Hollywood-Ending Portfolio – Forbes.com.
At this point last year, Iron Man had already crossed the $300 million mark, with Indiana Jones and the Kingdom of the Crystal Skull closing in. A 2009 movie of this genre–most likely Transformers–may not break the $300 million threshold until mid-July.
But 2009 may still eclipse 2008’s total revenue and take the crown as the highest-grossing year at the box office. One executive at Time Warner cited a “diverse film slate” for Warner’s success in particular, pointing to its investment in both large and small films.
James Marsh, senior research analyst at Piper Jaffray ( PJC – news – people ), was bullish on the sector though he mentioned that not all studios are created equal. “I think the guys that have the most exposure to theatrical [releases] seem to be holding up well,” he said. This, he pointed out, worked in favor of smaller companies.
Though small- and medium-budget films don’t necessarily have the built-in audience recognition of a Batman or Star Wars franchise, their profits are still very realistic. The Proposal, only two weeks into its run, has out-grossed Land of the Lost, a film that cost more than twice as much to produce and had the kitsch value of a campy canceled TV series behind it.
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$FXE Euro likely to reverse trend now and start back to 1.45
about 2 hours ago from CoTweet
The global credit crisis has hit the Indian entertainment industry as well, contrary to the popular opinion and consensus that entertainment and gaming industry are actually recession proof. And now an interesting theme is emerging out of all this in Bollywood.
After getting the industry status in 1998, Bollywood saw some big corporate houses(Reliance ventured in to Adlabs, Big Pictures, Big Music etc) taking some serious interest in this industry and a host of production companies(PNC, Percept Pictures, Excel Entertainment, Sahara) and distributors came into existence. As a result the industry saw a structural shift, giving rise to companies that could now produce more films in a year, could distribute them on their own and making good margins. This lifted Bollywood out of the shambles that it was in just decade ago. The effect being that Hollywood studios like Disney, Pixar, Fox want to co-produce, and invest in Indian cinema. This will automatically lead to increase in overseas sales which currently contribute roughly 10% of the total revenues.
Bollywood has also grown in size as the producers don’t need to depend on theatrical releases alone in order to recover their investment. Home videos and satellite rights were also contributing significantly to their top and bottom lines.
The studio model and an idea of having a production house was pioneered by none other than Yash Chopra himself, the biggest name in Indian cinema who has given some memorable movies like Chandni, Silsila, Kabhi kabhi etc. However, the recent years haven’t been very profitable for the company. With a host of films like Tashan, Tara Rum Pum, Kabul Express, Roadside Romeo(animated movie,co-produced by Walt Disney), Thoda Pyaar Thodi Magic all failed to perform well at the box office even after having A-list actors in their kitty for every project. The only projects that did well at the box office were noth SRK starrer ‘Chak De India’ and ‘Rab ne bana di jodi’.
YRF seems to be in serious trouble now. They recently laid-off 20 people; apparently they were executive producers. They are also stepping back from the distribution business now, as they are now turning extremely risk-averse. Due to this, Karan Johar(owner of Dharma Productions)who literally admires Yash Chopra’s work and contribution to cinema and is a close family friend, had to find new distributors(UTV Software Communications) for his upcoming releases Ranbir Kapoor starrer ‘Wake up Sid’ and Multi-starrer film ‘New York’. KJo managed to sell both his movies for a whopping Rs 78 cr.
But in my opinion the biggest cause of YRF’s troubles is not recession(which came in only later) but bad choice of scripts and high cost of production. They also marketed the product in a wrong way, projecting an image of something which was not the true essence of the movie, like Tashan. I guess they did take risks by giving chances to new directors and script-writers but they failed to execute things well. Some of the bets paid off well like Chak De India. But we all know that a company can’t depend on 2-3 break out successes. They have to be consistent in performance and have to market the product for what it is. And these days the ‘word of mouth’ travels 10x faster than before, Therefore a bad movie will die out more rapidly, with box office collections falling sharply in a couple of days time, with bad reviews floating all the over the internet with blogs and discussions dissecting the movie and performances, as opposed to a week’s time earlier on.
I see a leader emerging out of all this chaos though. Progressing gradually and carefully, UTV Software Communications(listed in AIM/BSE in 2005) is now one of the biggest names in the industry challenging established players in scale and box office success across different genres and budgets. They gave a bunch of hits in 2008, like Fashion, Oye Lucky Lucky Oye, Jodha Akbar and Race. Although Race and JA contributed 30% to the kitty, the company’s business model is to produce a mixed range of films, including small and big budget movies, signing the best talent and bringing efficiency in production costs.
UTV seems to be diversifying their portfolio of movies/IPRs pretty well, producing movies on new and old themes in order to cater to the tastes of diverse and demanding Indian audiences. They are actually carving out a niche for themselves, where people have started associating quality with their name. Although recession has hit them equally, they are not going to scale back this year. They are actually hoping to see some rationalization is their cost structure, which seems difficult, as bulk of the costs are ‘Star Costs’. If they manage to get that correction, then probably they could also get a better ROI(Return on Investment). I guess another big chunk of expenditure is marketing costs, and this has actually increased as a % of total budget of the movie, because pictures are promoted as brands these days and hence involve more investments in marketing them.
In 2008 they produced 10 movies, and this year the pipeline contains 15-16 odd films. The next big one I am really waiting for is Vishal Bharadwaj’s Kaminey starring Shahid Kapoor and Priyanka Chopra expected sometime in June 2009.
As a result of the economic slowdown, I can see a serious shift towards good content, efficient capital allocation and correction in star prices(Akshay Kumar charged Rs 20 cr for Tasveer, and it grossed Rs 16cr at the box office)which was making it difficult to recover costs most of the times. I guess only the strongest and the most versatile can weather this storm and one day an Indian movie produced, directed, distributed and performed by Indian artists, based on an Indian subject would get an Oscar.
Sphere: Related Content Reliance Capital who stock is almost up by more than 45 percent in just 4 trading session has informed that its looking to divest up to 26 percent in its insurance arm Reliance Life Insurance through an IPO as well as by inducting a strategic investor. Reliance Capital holds 100% in Reliance Life Insurance. Reliance Life Insurance would be valued well in excess of Rs 12,000 crore and they will have more clear picture on it in another 3 to 4 months.
Reliance Life insurance is considered to be 4th strongest in line next to ICICI, SBI Life and Bajaj Allianz. They have almost more than 10 percent share in the indian insurance market.
via <a href=’www.rupya.com’>Rupya</a>
zyakaira notes: The 3-4 insurance IPOs including ICICI Bank IPO for separating capital structures and governance would themselves bring companies with a valuation of INR 120000 Crores or around $25 Billion to the listed markets at BSE and NSE. Along with the PSUs and Infra stocks we may be adding market cap equivalent to India’s GDP in these 1-2 years and raising more than $10 billion from the markets
Adlabs Films, India’s largest multiplex chain, controlled by billionaire industrialist Anil Ambani, is launching one of the country’s biggest outsourcing businesses to service the global movie and television industries.
The new unit will digitise films and television shows from clients’ archives or libraries, restore old prints and adapt content for use in different formats, such as DVDs or mobile phones.
Its first contract is from the state-run National Film Archive of India in Pune to digitise and restore 1,000 films.
“One [area of work] is the old legacy content, which has to be converted into digital, including all these studio classics – Paramount, Mickey Mouse and all of that – and then there is all of the television content,” said Anil Arjun, chief executive officer of Adlabs.
Mr Ambani’s Reliance group is not the first Indian company to target media outsourcing, but it claims to be the largest effort yet attempted, with a dedicated workforce starting at 300 people and scaling up to 1,200 in one year.
The company says India’s competitive advantage is outsourcers’ ability to build quickly the scale necessary for large projects, such as the contract from the National Film Archive of India.
Adlabs operates 430 multiplexes in India, the US and Malaysia and has a film and media services unit specialising in post-production and processing among other things.
The company is a unit of Mr Ambani’s Reliance ADAG group, which also has a tie-up with Stephen Spielberg’s DreamWorks. It argues that its 25-year history in the film industry will enable it to trump competition from existing operators that are more experienced in outsourcing.
These include a joint venture between outsourcing company Genpact and media group NDTV, and a separate tie-up between another conventional outsourcing group Infosys BPO and TV 18, a media conglomerate.
The joint venture between Infosys and TV 18, Source18, does not have a dedicated team for media outsourcing but instead assembles teams as necessary when contracts come in.
via FT.com / India.
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