English Entertainment
Entertainment sector still unattractive, say VCs
MUMBAI: Venture capitalists (VCs) haven’t changed their outlook on the entertainment industry despite the recent sops offered by union minister of law & justice, commerce & industry Arun Jaitley in the EXIM policy announced on 31 March 2003.
Jaitley had mentioned the following in his speech: “For entertainment services, which is singularly handicapped by lack of investment, but has tremendous opportunities for exports, it is proposed to promote through suitable tax incentives contributions to venture capital funds which will provide finance to this sector. We are in dialogue with ministry of finance how best this can be done.”
The verdict of the VC financing and mentoring session on the opening day of the Ficci FRAMES 2003 held on 13 March was clearly in favour of corporate governance and more transparency in the media business.
The Indus Entrepreneurs’ (TIE) president elect and PassionFund CEO Mahesh Murthy says: “Nice though the policy is, I think there are very few or no venture capitalists who are even interested in funding efforts in the entertainment sector. The issue is not taxes – I am not sure that is the major problem.”
“The key issues stopping investment in the entertainment and media sector are everything from a lack of corporatisation, over-dependance on personalities in businesses, low creation of intellectual property, the non-transparency of distribution and doubtful exit routes,” says Murthy.
Murthy adds that VCs need to know whether they can get money out of any investment. Then, they would want to figure out if they could make any profits out of the investments. Then, and only then would they even begin worrying about taxes.
Enam Financial Consultant CEO Mahesh Chhabria also seconds the view: “Well, one needs to go through the fine print in greater detail. As of now, nothing much has changed. Indian media companies have failed to create sustainable media properties, create workable business system models, tackle competition, develop alternate business models, and ensure adequate returns to investors through corporate governance. The companies have also failed to develop scalable models.”
While speaking during the Ficci FRAMES 2003 session, Ambit Finance pte MD Ashok Wadhwa had said: “The bad news is that VCs in the television content business no longer exist – what remains is private equity funding. “The so-called ‘VCs’ lost so much money in the last two years that they have become hesitant.”
Several other media analysts who spoke to indiantelevision.com also voiced similar concerns. However, they added that the recent crisis in Asian financial markets would definitely benefit listed Indian companies as foreign financial institutions will channelise funds into India. “But very little of this inflow will find its way into the entertainment sector,” they add.
Union minister of law & justice, commerce & industry Arun Jaitley had admitted that there were problems stunting growth in the course of his speech by saying: “We have immense potential for exports in certain services sectors such as entertainment and education. Each sector has its own specific problems such as lack of investment, inadequacy of laws relating to piracy. Nonetheless, we have to leverage India�s obvious advantages in these sectors.”
The minister proposed to set up sector-specific working groups with representatives of ministry of finance, the administrative ministries concerned, the state governments, financial institutions and the industry to work towards a common goal by framing action plans to achieve the potential to be implemented within a specified time schedule.
English Entertainment
Warner Bros. Discovery shareholders approve Paramount deal
Investors wave through a $111 billion megamerger but deliver a stinging, if toothless, rebuke over half-a-billion-dollar goodbye packages
NEW YORK: The shareholders said yes to the deal. They said no to the cheque. At a virtual special meeting on Thursday that lasted barely ten minutes, Warner Bros. Discovery investors voted overwhelmingly to approve Paramount Skydance’s $111 billion acquisition of the company — and then turned around and voted against the lavish exit pay packages lined up for chief executive David Zaslav and his fellow outgoing executives.
Not that it will make much difference. The compensation vote is purely advisory and non-binding. The Warner Bros. Discovery board can, and almost certainly will, pay out as planned.
But the symbolism stings. It is the second consecutive year that WBD shareholders have voted against the executive compensation packages, and this time they had good reason. Zaslav’s exit deal is, by any measure, extraordinary. Under the terms filed with the Securities and Exchange Commission, he is set to receive $34.2 million in cash severance, $517.2 million in equity in the combined company, and $44,195 in continued health coverage — a total of at least $550 million. On top of that, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the Internal Revenue Service on his accelerated stock vesting, though the company says that figure will decline depending on when the deal closes. As of March 11, Zaslav also held $115.85 million in vested WBD stock awards — and last month sold a further $114 million worth of WBD shares.
Shareholder advisory firm ISS recommended voting against the compensation measure, citing “problematic” tax reimbursements to Zaslav and the full vesting of his stock awards.
Zaslav will be bound by a two-year non-competition covenant and a two-year non-solicitation of customers and employees after the deal closes.
His lieutenants are not walking away empty-handed either. J.B. Perrette, chief executive and president of global streaming and games, is in line for $142 million, comprising $18.2 million in cash severance and $123.9 million in equity. Bruce Campbell, chief revenue and strategy officer, will receive an estimated $121.5 million, including $18.8 million in severance and $102.7 million in equity. Chief financial officer Gunnar Wiedenfels is set for $120 million, made up of $6.6 million in cash severance and $113.1 million in equity. Gerhard Zeiler, president of international, will get $82.6 million, including $11.9 million in severance and $70.7 million in equity.
The deal itself, clinched in February after Netflix declined to raise its bid for Warner Bros., still needs regulatory clearance from the Justice Department and European authorities. Several state attorneys general are also weighing legal action to block it.
Senator Elizabeth Warren, Democrat of Massachusetts, was unsparing. “The Paramount-Warner Bros. merger isn’t a done deal,” she said after the shareholder vote. “State attorneys general across the country are stepping up to stop this antitrust disaster. We need to keep up this fight.”
If it does go through, the combined entity would be a formidable beast, bringing together Paramount Skydance’s stable — CBS, CBS News, Paramount Pictures, Paramount+, BET, MTV and Nickelodeon — with WBD’s portfolio of HBO, Max, Warner Bros. film and TV studios, DC, CNN, TBS, TNT, HGTV and Discovery+. Paramount has said it expects $6 billion in cost savings from the merger, which is Wall Street shorthand for mass layoffs on a significant scale.
The ten-minute meeting was presided over by chairman Samuel Di Piazza Jr., with Zaslav, Campbell, Wiedenfels and chief communications officer Robert Gibbs in virtual attendance. Di Piazza was bullish. “We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” he said. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
Zaslav echoed the sentiment. “Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” he said. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders.”
Paramount Skydance struck a similar note. “Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery,” it said in a statement, adding that it looked forward to “closing the transaction in the coming months.”
The shareholders have spoken on the merger. On the pay, they were ignored before the vote was even counted.
