Indian motion picture production company Eros International is pivoting from films toward a digital content and distribution business in the US and China as part of its post-Covid strategy.
“Since the last three years, we were working towards reducing our reliance on the theatrical revenues,” said Kishore Lulla, chairman of NYSE and BSE-listed Eros International. “Given the way the industry is impacted by the Covid-19 outbreak, we believe this business will not be the same. I don’t think that there is any growth in the theatrical business as social distancing will be the new normal for another 18 months.”
Talking to ET after stitching a deal with independent Hollywood studio STX Entertainment, Lulla, who is also the CEO, said this is the first instance of a Hollywood studio merging with an Indian company.
“At a time when the world is in lockdown mode, we have signed this deal and big investors like TPG and Hony Capital are investing. We are now a global company in true sense, with offices in Burbank and Mumbai and access to the biggest of markets, including US and China, which is where our focus is going to be,” Lulla said.
Going forward, he said, Eros International India will be a small play with just 25% contribution to the company’s overall business.
Eros and STX Entertainment had announced a merger on Saturday to form Eros STX Global.
To be listed on the NYSE, the company will have a revamped capital structure, including $125 million of incremental equity from new and existing STX equity investors like TPG, Hony Capital, and Liberty Global, along with a $350 million JP Morgan-led credit facility.
“It will be a net debt-free company,” Lulla said. “Currently, we have $264 million net debt and $300 million in contracted revenues.”
The merger will also allow Eros STX Global to access Eros’ partnerships with Apple, Amazon, Microsoft, NBCUniversal and Google.
While Lulla will be executive co-chairman of the new company, STX’s Robert Simonds will be its CEO and co-chairman.
Andrew Warren will be Eros STX Global’s chief financial officer while Rishika Lulla Singh and Noah Fogelson will be co-presidents, and Prem Parameswaran will be head of corporate strategy.
Eros STX Global plans to release about 40 films, including seven sequels and 100 original shows in 2020.
After the merger is completed, Lulla will have over 40% voting right and 10-15% economic interest in the company, while TPG and Hony Capital will own 15-16% each.
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