Eros to build content, OTT capability with RIL investment
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Rebecca Hawkes
| 22 February 2018

Indian over-the-top (OTT) film entertainment provider Eros International plans to significantly increase its content slate and build a competitive advantage for its digital video platform Eros Now after selling a 5% stake to India's largest company Reliance Industries Ltd (RIL).

Both parties will invest up to INR10 billion each to produce and acquire Indian films and digital originals across all languages, following the investment. RIL has agreed to pay US$15 per share in Eros International, equating to around $36.2 million.

"Our market leadership in films entertainment, our proven track record and the success of our OTT service, Eros Now have all been instrumental and bringing this deal together. Simply put, it allows us to double our slate with half the capital with both Reliance and Eros jointly sharing the digital rights," Jyoti Deshpande, CEO, Eros Group said following the announcement.

Deshpande, who has worked for Eros since 1998, will step down to head RIL's media and entertainment business from April - a move she called 'bittersweet', given her long association with the film distribution and production business.

Wishing her luck in her new role, Kishore Lulla, executive chairman of Eros International, confirmed he will resume his role as group CEO with Deshpande's move to RIL.

"Eros is now at the infection point with the Indian entertainment space evolving rapidly beyond by 4G adoption and a dynamic young consumer population with an unstable appetite for the content and they can watch anytime anywhere," he said, while announcing the company's latest financial results.

Eros Plc posted a net profit of $32.01 million for the quarter ended 31 December 2017 compared to $114.8 million in the corresponding quarter of the previous fiscal year, due to fewer film releases. Operating profit nearly doubled to $16.5 million, in comparison to $8.2 million in the same quarter a year earlier. Revenue increased 13.8% to $65.2 million from $57.3 million.

While Deshpande will remain a non-executive director on the Eros board, Reliance Industries said she has been tasked to "organically build and grow businesses around the content ecosystem such as broadcasting, films, sports, music, digital, gaming, animation, etc, as well as integrate RIL's existing media investments ... with a view to build, scale and consolidate the fragmented $20 billion Indian M&E sector".

Among the wide-ranging assets already controlled by Mukesh Ambani's Reliance Industries is the Viacom18 TV network (a joint venture with Viacom) and the disruptive mobile broadband operator Reliance Jio.

The stake in Eros also follows the purchase by RIL last year of a 24.9% stake in over-the-top (OTT) platform Alt Balaji, a wholly-owned subsidiary of Balaji Telefilms, for INR4.13 billion.