Disney is currently exploring strategic options for its business in India, reflecting the shift in Star India’s fortunes following Disney’s acquisition of Fox’s entertainment assets. As per a Wall Street Journal report, options could involve a joint venture or even a sale.
In an effort to facilitate the growth of its India business and alleviate some financial burden, Disney has engaged in discussions with at least one bank, said the report. The talks are still in their early stages, and it remains uncertain which course of action Disney will ultimately pursue.
As Disney and its competitors navigate a costly transition towards streaming platforms, they are increasingly shifting away from traditional TV enterprises. In a bid to make that transition happen, in 2019, Disney paid $71.3 billion to acquire the entertainment assets of 21st Century Fox. At the time, Star India stood out as one of Fox’s prized possessions, playing a crucial role in Disney’s strategy to expand its nascent streaming business worldwide. This acquisition granted Disney the broadcasting and streaming rights for the Indian Premier League cricket matches, along with numerous TV channels in multiple languages and a stake in a Bollywood movie production company.
Hotstar, once proud of its impressive milestone of 150 million monthly active users, was experiencing continuous growth, largely driven by its exclusive streaming rights to the Indian Premier League (IPL). However, this growing user base turned into a significant challenge when Hotstar lost the streaming rights of IPL to Reliance’s JioCinema. This setback posed a considerable obstacle for Disney+ Hotstar, as the loss of such a marquee sporting event meant a potential decline in user engagement and a risk of losing a substantial portion of their dedicated audience.
The WSJ report also said, Hotstar is expected to lose 8 million to 10 million subscribers in its fiscal third quarter. It also says Star’s overall revenue for the fiscal year ending September 2023 is expected to drop around 20 percent to slightly less than $2 billion. Its earnings before interest, taxes, depreciation and amortization is expected to fall roughly 50 percent for that time period, from about $200 million last year. That is a sharp decline from Fox’s projections before the deal that Star India would earn $1 billion in Ebitda by 2020.