Disney Set to Sell Majority Stake in Indian Biz, Including Hotstar Streamer, For a Loss

Disney is reportedly set to sell a 60% stake in its Indian media assets, which include the Hotstar streaming service, JioCinema, the ad-supported free streaming service, Star India TV and Tata Sky, as it seeks to reduce global operating costs. Former Disney senior executive Kevin Mayer, who was brought back by CEO Bob Iger last July as a consultant, is heading the deal for Disney.

Hotstar has been integral to Disney+ since the latter’s global debut in late 2019, representing at its peak almost 40% of the streamer’s worldwide subscribers.

That significance waned last year when subscribers began exiting the platform after Hotstar lost its exclusive streaming rights to Indian Premier League cricket, which, along with soccer, is a national sport in India.

Disney+ Hotstar accounted for 37.4 million subs at the end of the most-recent fiscal period, down from 40.4 million through June 30, 2023.

In 2022, Hotstar lost the IPL rights following a multi-billion dollar bidding war with Viacom18, the latter a partnership between India’s Reliance Industries, Paramount Global and private equity company Bodhi Tree Systems.

Viacom18 is now paying $1.5 billion in cash for majority ownership of Disney’s Indian media assets, which is valued at $3.9 billion, according to The Wall Street Journal, which first reported the deal. The deal is slated to close this month.

When Disney assumed ownership of Hotstar, Star India TV and Tata following its $71.3 billion acquisition of 20th Century Fox, the Indian assets were valued upwards of $7 billion.

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Reports: Disney Looking to Sell Controlling Stake in India Hotstar Streaming Biz

The Walt Disney Co. is reportedly mulling the sale of its controlling stake in its India-based Hotstar streaming business. Disney, which has been on a mission to reduce operating costs companywide, and generate operating income in its direct-to-consumer business unit under the direction of restored CEO Bob Iger, has a double-edged asset in Hotstar.

Disney acquired the streamer as part of its $71.3 billion acquisition of 21st Century Fox in 2019. Hotstar was key to the explosive growth of Disney+ when it launched in 2019, representing almost 40% of the platform’s subscribers. The percentage was misleading as it was largely based on Hotstar’s exclusive access to Indian Premier League cricket, a national sport.

Disney+ Hotstar earlier this month saw 35 million viewers for the India-Pakistan cricket match.

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When Paramount-owned Indian subsidiary Viacom18 outbid Disney for a new exclusive five-year rights to IPL, Disney+ saw its Hotstar subscriptions drop from 57.5 million to 40.4 million.

Taking a page from the AT&T corporate playbook that saw the telecom sell off minority stakes with controlling interest in DirecTV and the former WarnerMedia (now Warner Bros. Discovery), Disney is reportedly looking to sell Hotstar, which it valued at around $10 billion.

First reported by The Wall Street Journal last year, and most recently by Bloomberg and Reuters, Disney could be looking at spinning off stakes or entering into joint ventures.

In a regulatory filing last week, Star India reported an operating loss of $444 million on revenue of $637 million.

Disney Reportedly Looking to Sell Indian Media Assets, Including Hotstar

The Walt Disney Co. reportedly plans to sell and/or spin off stakes in its Indian media properties, including streaming giant Hotstar — the platform that helped launch and continues to represent a sizable subscriber stake in the Disney+ service.

First reported by Bloomberg, which cited sources familiar with the situation, Disney has held preliminary talks with numerous Indian media companies, including Sun TV Network Group, the Adani Group, and Reliance Industries, among others. While no parties are commenting, and the talks could amount to nothing, any possible deal could mirror what AT&T did selling minority stakes with operational control in DirecTV and the former WarnerMedia (now Warner Bros. Discovery).

The reported sale/spin-off is part of Disney’s strategy to maximize the value and reduce the operating costs of its expansive asset portfolio. With the direct-to-consumer business not turning a profit as quickly as envisioned for most media companies not named Netflix, the money-losing situation for Disney and Hotstar was magnified by the latter’s loss of exclusive streaming rights to Indian Premier League, the top cricket division for the country’s most-popular sport.

Viacom18, an Indian conglomerate co-owned by Paramount Global, acquired the IPL streaming rights for $2.7 billion, choosing to broadcast them for free (with ads). Disney countered by streaming for free on Hotstar the current Cricket World Cup being held in India.

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Regardless, Disney + Hotstar lost 24% of its subscribers due to the loss of access to the IPL, resulting in 40.4 million subscribers in the most recent fiscal period. Disney+ global subscribers dropped to 146.1 million, down from previous analysts’ estimates of around 155 million. At the same time, Disney+ domestic subscribers continued to fall, offset slightly by international sub gains, excluding India.

Disney reports forth quarter and full-year fiscal results on Nov. 8.

CEO Bob Bakish: IPL Cricket Key to Paramount+ Indian Launch in 2023

When Viacom18 — which is 49% owned by Paramount Global — earlier this year paid 205 billion rupees ($2.6 billion) for the streaming rights to the Indian Premier League (IPL) covering 410 cricket matches over a five-year period, the move was seen as a potential blow to Disney+ — and a win for Paramount+.

Speaking Aug. 4 on the fiscal call, Bob Bakish, CEO of Paramount Global, reiterated why the media giant and The Walt Disney Co. spent a combined $5.6 billion on rights to a sport most Americans have never heard of.

“Cricket is at the top of the food chain in India,” Bakish said.

Indeed, since the launch of Disney+ in late 2019, the IPL has played a key role in the SVOD’s burgeoning subscriber growth. Disney acquired the cricket rights through its acquisition of 20th Century Fox Studios from Fox Corp. The studio’s Hotstar streaming platform currently holds the IPL rights. Disney retains the linear rights.

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How that plays out for Disney+ is the $64,000 question. Currently Hotstar with the IPL represents more than 50 million Disney+ subscribers, or almost 37% of the SVOD’s subscriber base. Without the IPL, that percentage is likely to plummet and shrinking the Disney+ global subscriber base significantly.

Bakish said Paramount+ plans to offer cricket as part of a “hard bundle” tiered pricing plan, benefiting from the association while not directly investing financially as a distributor.

“It will be a real engine for streaming,” Bakish said. “And Paramount+ will benefit by being part of that … because we get the very material benefit of cricket.”

Disney+ Loses Indian Professional Cricket Streaming Rights to Paramount+

In a potential blow to SVOD subscriber growth in India, Disney lost out on its bid to retain Disney + Hotstar streaming rights to Indian Premiere League cricket. Disney lost the rights to Viacom18 — an Indian subsidiary of Paramount Global, parent to the Paramount+ streaming service.

Disney reportedly paid a record 236 billion rupees ($3 billion), while Viacom18 — which is 49% owned by Paramount Global — paid 205 billion rupees ($2.6 billion) for the streaming rights covering 410 matches over a five-year period.

The streaming rights to cricket have been key to driving Disney+ subscriber growth past 137 million in the most-recent fiscal period that ended March 31. Of that tally, more than 50 million subs come from India — largely due to IPL cricket, which is a national sport.

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The winning bid could factor significantly in the success of Paramount+, which is set to launch service in India in 2023 together with Viacom18.

“This year will be monumental for our streaming strategy as we accelerate our global ambitions, rapidly expanding Paramount+ in Europe beginning with the U.K., Italy, Germany, France and more by the end of this year and debut in Asia with South Korea in June,” Raffaele Annecchino, president and CEO of international networks, studios and streaming at Paramount Global, said in a statement last month.

Viacom18/Paramount Global reportedly beat out third-party bids from Sony and Amazon Prime Video.

Disney Suspends Disney+ SVOD Service Launch in India

Disney has called off the March 29 launch of its branded subscription streaming video service, Disney+, in India due to myriad issues involving the global coronavirus pandemic. The planned March 24 launch of the service in Europe remains on.

With India halting all commercial airline traffic within its borders and the suspension of the Indian Premier League (IPL) cricket tournament, Disney planned promotions around the service’s launch with its Hotstar over-the-top video platform came to a halt. Hotstar reportedly generates more than 300 million monthly views with its app and website.

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“We recently announced that Disney Plus would launch in India through the Hotstar service in conjunction with beginning of the Indian Premier League cricket season,” Uday Shankar, president of The Walt Disney Company APAC, and chairman of Star and Disney India, said in a statement. “Given the delay of the [cricket] season, we have made the decision to briefly pause the roll-out of Disney Plus and will announce a new revised premiere date for the service soon.”

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