Disney Sells Majority Indian Biz Stake for $8.5 Billion in Joint Venture With Reliance Industries

The Walt Disney Co., Reliance Industries, and Viacom18 Feb. 28 announced the formation of joint venture that sees Disney relinquish majority ownership of its Indian TV and streaming video businesses, which includes the Star service, for $8.5 billion. The joint venture will combine the Reliance-owned Viacom18 and Star India to form the Star India Private Limited.

In addition, Reliance, which will control the joint venture with a 63.16% ownership stake, will invest $1.4 billion in it at closing. Disney will own 36.84% of the joint venture.

Disney will contribute certain media assets, including movies and productions in India, licensing more than 30,000 Disney content assets.

The entity will combine TV and digital streaming platforms, including Colors, StarPlus, StarGold, Star Sports and Sports18, and streaming video platforms JioCinema and Hotstar. The joint venture will cater to 750 million Indians (more than twice the U.S. population) in India and living around the world.

Nita Ambani, wife of Reliance chairman Mukesh Ambani, will be chairperson of the joint venture, with Uday Shankar as vice chairperson.

Disney CEO Bob Iger said the deal provides numerous opportunities in the world’s most populous market.

“Reliance has a deep understanding of the Indian market and consumer,
and together we will create one of the country’s leading media companies, allowing us to better serve consumers with a broad portfolio of digital services and entertainment and sports content,” Iger said in a statement.

The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of 2024 or the first quarter of 2025.

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Disney Reportedly Set to Spin Off Indian Hotstar Streaming Business

The Walt Disney Co. has reportedly signed a non-binding term sheet with Reliance Industries Ltd. to merge the companies’ Indian media assets, including the Hotstar streaming platform and JioCinema, the ad-supported free streaming service.

The proposed cash-stock deal — expected to close in February 2024 — would see Reliance own 51% of the new company, with Disney retaining 49%, according to The Economic Times, which first reported the deal. Former Disney senior executive Kevin Mayer, who was brought back by CEO Bob Iger in July as a consultant, is heading the merger for Disney.

India has been key to the evolution of the Disney+ subscription streaming VOD service, with the Hotstar platform accounting for nearly 40% of Disney+ total subscribers after its 2019 launch. Disney acquired Hotstar as part of its $71.3 billion purchase of 21st Century Fox.

Key to Hotstar was the platform’s exclusive streaming rights to the Indian Premier League, a men’s professional cricket league contested by 10 city-based franchise teams. Cricket is the national sport in India. But Hotstar lost the multibillion-dollar IPL rights earlier this year to Viacom18, an Indian-based media company co-owned by Paramount Global and Reliance.

Since that announcement, Disney+ has lost millions of Indian subscribers, including 2.8 million in the most recent fiscal period, with Hotstar accounting for 25% of all Disney+ subscribers.

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.

Cineverse Expands Operations in India to Reduce U.S. Operating Expenses

Cineverse July 11 announced the launch of Cineverse Services India, a new business unit set up to stem cost-cutting efforts in the current fiscal year at the erstwhile home entertainment distributor.

The new unit, located in Kolkata and adjacent to Cineverse’s engineering and technology facility, will focus on providing customer service, quality control, operations, accounting, information technology, administrative and other back-office functions to support Cineverse’s digital growth.

The company expects the move to save $7.5 million in SG&A expenses over the course of the current fiscal year (a 21% reduction), driven by savings from the relocation of more than 50 U.S. jobs, full-time role eliminations, and the reduction of third-party contract labor.

Cineverse, which just had its stock trading removed from possible delisting by Nasdaq, expects the majority of back office and support roles to be operated from India, while the U.S. employee focus will center on sales, business development, content and consumer strategy roles.

The company recently hired Abhishek Pradhan as a key leader of these efforts. Pradhan has over 13 years’ experience in business process outsourcing and operations management, with experience at companies such as MSR IT Solutions and WIPRO BPO. He will work closely with senior management and will oversee the hiring, training and day-to-day management of the Indian team.

“Over the last two years, we have demonstrated that our Indian operations provide a significant and unique strategic advantage in the market,” CEO Chris McGurk said in a statement. “As we continue to focus on leveraging next-generation technologies like AI, machine learning and computer vision already integrated into our Matchpoint platform suite, the teams in India will become a central and integral part in building the future of streaming across all facets of the company.”

Ampere: Disney+ Adjusting India SVOD Market Strategies

Disney+ is shifting its market priorities in India with a focus on spending and operational profit, according to new data from Ampere Analysis.

With about 53 million paid subscribers through March 31, Disney+ Hotstar is the largest subscription VOD service in India, and represented 33% of the global Disney+ subscriber base of almost 158 million through the first quarter.

Specifically, Ampere contends Disney+ Hotstar is refocusing efforts around live streaming sports rights as illustrated by the company’s withdrawal from the Indian Premier League (IPL) cricket license rights bidding last year. Ampere estimates that this saved Disney+ spending about twice its entire streaming revenue from the past five years combined.

Shutterstock image

Instead, Viacom18 — which is 49% owned by Paramount Global — paid 205 billion rupees ($2.6 billion) for the IPL streaming rights covering 410 cricket matches over a five-year period and streamed on the company’s Jio Cinema platform.

Disney+ Hotstar is also being more careful in its content spending, especially on acquiring titles. It ended its licensing deal with Warner Bros. Discovery in March, and did not bid for rights to distribute Paramount Pictures movies and NBCUniversal titles in India. All three Hollywood studios’ content are now streaming on Jio Cinema.

Disney+ Hotstar still owns streaming rights 123 of the top 500 most popular titles in India, which places it behind Prime Video but ahead of Netflix (117 titles) and Jio Cinema (38 titles), according to Ampere.

“With India set to keep its position as the world’s third largest SVOD market after the U.S. and China, with an expected growth to 180 million subscriptions in 2027, it is important for Disney+ Hotstar to balance its content expenditure and subscription retention and acquisition,” senior analyst Orina Zhao said in a statement.

Jio Cinema is expected to announce more standard subscription plans later this year, which will increase direct competition with existing SVOD players and change the ecosystem of the market, according to Zhao.

“Disney+ Hotstar needs to find new sustainable strategies to improve profitability while maintaining its significant subscriber base in India,” she said.

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Disney’s Q1 Hotstar India Subscriber Loss Offsets Disney+ Global Sub Gains

The Walt Disney Co. Feb. 8 disclosed it lost 3.8 million Disney+ Hotstar subscribers in India in the first quarter (ended Dec. 31, 2022), from the previous fourth quarter (ended Oct. 1, 2022) offsetting Disney+ subscriber gains in North America and worldwide. It was the first-ever subscriber loss for Disney+ since launching in November 2019.

Disney+ ended the quarter with 161.8 million global subscribers, down from 164.2 million subs at the end of October 2022. North America added 200,000 subs to end the period with 46.6 million subs, while international markets (excluding India) added 1.2 million subs to end the period with 57.7 million.

CFO Christine McCarthy said the December Disney+ domestic price increase has been playing out as expected, with only modestly higher subscriber churn (subs not renewing), which she said could negatively impact the fiscal second quarter. That impact, in addition to slower than previously expected growth in some international markets, suggests core Disney+ subs may grow only modestly in Q2 at a similar pace to the first quarter, according to McCarthy.

“As we have said before, sub growth will vary quarter-to-quarter, and we expect to see higher core subscriber growth towards the end of the fiscal year,” she said.

ESPN+ added 600,000 subs to end the quarter at 24.9 million, while Hulu added 700,000 subs to end the period at 43.5 million. Hulu + Live TV added 100,000 subs to end the period with 4.5 million.

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Overall, Disney’s direct-to-consumer business segment increased revenue 13% to $5.3 billion from $4.69 billion, while the operating loss increased $500 million to $1.1 billion. The increase in operating loss was due to a higher loss at Disney+ and a decrease in results at Hulu, partially offset by improved results at ESPN+.

Specifically, Disney+ programming and production costs increased almost 83% to $1.68 billion, from $920 million in the previous-year period. Hulu costs increased almost 15% to $2.1 billion, from $1.83 billion. ESPN+ costs declined almost 8% to $395 million, from $427 million.

Disney claims its DTC business will be profitable by fiscal year 2024.

Digital TV Research: Asia-Pacific Region to Add 205 Million SVOD Subs by 2027, Led by China

The Asia-Pacific region is projected to have 746 million SVOD subscriptions by 2027, up from 541 million in 2021, according to data analysis from Digital TV Research. China would account for 364 million SVOD subscriptions — or 49% of the region’s total, according to the projections. India would add 92 million subs to reach 176 million.

Major U.S.-based platforms Netflix, Disney+, Paramount+, HBO Max, Prime Video and Apple TV+ are projected to account for only a quarter of the region’s SVOD subscriptions — much lower than in any other region in the world. Notably, Netflix generated its only global subscriber gains (1 million) in the Asia-Pacific region in the most-recent fiscal quarter, ended June 30.

“These platforms will never gain access to China, and India has plenty of local [streaming] players,” analyst Simon Murray said in a statement.

Disney+ overtook Netflix in total subscribers (when combined with Hulu and ESPN+) in 2020 — almost entirely due to its success in India. Disney+ Hotstar reshaped the SVOD landscape in India, mainly by controlling the rights to India Premier League cricket. Disney+ Hotstar did not retain those rights. The platform will lose 4.5 million subscribers in 2022 and 10 million in 2023 before plateauing, according to Digital TV Research.

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Assuming that Disney+ retained the IPL rights in India, the previous forecasts estimated 127 million Disney+ subscribers across the region by 2027.

“Our revised forecasts predict 66 million by 2027 — 61 million less than before,” Murray wrote in the report.

Disney Star Retains International Cricket Council TV, Streaming Rights Through 2027

The International Cricket Council Aug. 29 confirmed that India-based Disney Star will be the home of all International Cricket Council (ICC) cricket matches after securing the TV and digital rights to both men’s and women’s global events through the end of 2027.

Disney Star secured the rights after paying an undisclosed “significant uplift” in carriage fees from the previous rights negotiations. The decision followed a bidding process that began in June.

“We are delighted to continue to partner with Disney Star as the home of ICC cricket for the next four years, which has delivered an outstanding result for our members and will support our ambitious growth plans,” ICC Chair Greg Barclay said in a statement.

The move comes after Disney + Star failed to retain the streaming rights to the Indian Premier League cricket competition. Disney lost out to a winning bid by Viacom 18, which intends to stream future matches on the rival Paramount+ platform.

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Cricket and India are key to Disney+ since the two components are considered key drivers in the streaming platform’s international growth. Disney + Hotstar subscribers account for 38% (58.4 million) of Disney’s 152.1 million Disney+ global subs.

K Madhavan, country manager and president, Disney Star, said the acquisition will help strengthen Disney’s status as a go-to source for everything cricket.

“We are delighted at being able to continue our association with the ICC and look forward to strengthening our partnership by growing the sport of cricket in the years ahead,” Madhavan said in a statement.

Google’s Sajith Sivanandan Named Head of Disney+ Hotstar in India

Disney has named former Google executive Sajith Sivanandan EVP and head of Disney+ Hotstar, the media company’s key streaming platform in India.

Sivanandan, who begins his new job in October, will be tasked with overseeing Disney+ Hotstar’s overall business operations in India with direct responsibility for defining the streaming service’s strategic business priorities and charting its product roadmap. He will also work closely with local leadership team in international markets as well as with the Disney+ team in the U.S.

Sajith Sivanandan

“[Sajith’s] deep experience in the region, combined with his strong leadership and business management skills will greatly benefit Disney+ Hotstar as the platform embarks on its next phase of growth,” Rebecca Campbell, chairman of Disney’s international content and operations group, to whom Sivanandan reports, said in a statement.

Sivanandan, who was managing director and business head of Google Pay and Google’s Next Billion User Initiatives for Asia Pacific, has his work cut out for him.

Disney+ Hotstar represented 38% of Disney’s branded subscription streaming video platform’s subscriber base at the end of the most-recent fiscal quarter with 58.4 million subscribers. Without Hotstar, which Disney acquired through its acquisition of 21st Century Fox in 2019, Disney+ would have slightly more than 93 million subs worldwide — on par with HBO/HBO Max/Discovery+ (92.1 million).

Yet, rival Paramount Global just acquired away from Hotstar the streaming rights to Indian Premier League cricket — a heretofore sub driver for Disney+. Without those rights, Disney+ Hotstar could see increased subscriber churn going forward.

Sivanandan doesn’t seem concerned.

“Disney and Star are brands with an incredibly rich history of innovation, user focus and storytelling, and Disney+ Hotstar brings those attributes together flawlessly,” he said. “The opportunity to come back home to where I started my career and to work alongside a very talented team to serve Disney+ Hotstar users in India and emerging countries is both a privilege and an honor.”

Disney+ Hotstar Eyeing Fewer Paid Indian Subs by 2024, Underscoring Impact of Cricket Rights Loss

The Indian streaming video platform Hotstar has helped Disney+ explode subscriber growth outside North America. Disney’s recent loss of the IPL professional cricket streaming rights in 2023 to Viacom18 — whose equity stake holder, Paramount Global, aims to exploit the loss when it launches the Paramount+ streaming platform in India next year — is now confirmed to impact Disney+ sub growth going forward.

Speaking on an Aug. 10 fiscal call, CFO Christine McCarthy said India’s continued outsized contribution to the Disney+ subscriber base would now translate into a projected Indian subscriber count of 80 million by the end of fiscal year 2024. That’s down from a previous projection around 100 million Indian Hotstar+ subs.

CFO Christine McCarthy

“We recently made the disciplined decision to not proceed with Indian Premier League digital rights, while evaluating the linear rights with the same discipline,” McCarthy said.

Hotstar added 13.5 million subscribers to Disney+ in the third quarter, due in large part to heightened consumer interest in the conclusion of the IPL in the quarter.

McCarthy said Disney aims to retain the linear rights to the IPL while exorcising the same fiscal discipline it did walking away from the SVOD rights.

“We intend to refine that target over time,” she said, remaining confident Disney+ will achieve profitability in fiscal-year 2024.

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