Disney-Owned 'Star India' Hit by Loss of Cricket Broadcast Rights
WSJ "Reviewing Financial and Strategic Options"
Global content company Disney, which has been struggling due to recent business setbacks, is reportedly facing deep concerns over its India operations, according to the Wall Street Journal (WSJ) on the 11th (local time). After failing to secure the streaming rights for cricket, the most popular sport in India, Disney is said to be reviewing strategic options such as whether to sell its Star India channel, one of its business units, or enter into a joint venture.
WSJ cited multiple sources, reporting that Disney is in discussions with financial institutions about the future of its India business, but since these talks are still in the early stages, it is unclear which option Disney will choose.
In 2019, Disney acquired 21st Century Fox for $71.3 billion (approximately 92.5 trillion KRW) to expand its streaming business. At that time, Disney also acquired the assets held by 21st Century Fox, among which Star India was considered the most valuable.
Back then, Star India held the broadcasting and streaming rights for the Indian Premier League (IPL), India's cricket league, and owned dozens of TV channels in multiple languages as well as stakes in Bollywood film production companies. Notably, Star India's Hotstar mobile streaming service, which was free at the time, had 150 million monthly active users.
This was why it was expected that Disney's India content business would only need to expand based on Star India.
However, the situation reversed last year when Disney lost the cricket broadcasting rights to Viacom18, a joint venture between competitor Paramount Global and an Indian local company. Hotstar, now under Disney+, saw a decline of 8 to 10 million subscribers in the third quarter of last year alone, and sources predict a total loss of 15 million users by this year. The disappearance of the broadcasting rights led to a sharp drop in users.
Consequently, Star India's performance also declined significantly. Star India's total revenue for the 2023 fiscal year is expected to fall below $2 billion, a 20% decrease compared to the previous year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are also predicted to drop to half of last year's $200 million.
Attention is focused on whether Disney, which has recently experienced poor performance, can secure profitability based on a new strategy. Disney+ streaming service is struggling to gain subscribers against Netflix, Disney World, which used to be a stable source of revenue, has seen a decline in visitors, and the recent box office failure of the movie "The Little Mermaid" indicates that business conditions are challenging. Investor anxiety is growing ahead of Disney's quarterly earnings announcement scheduled for the 9th of next month.
WSJ reported that Disney has pledged to investors that it will make its streaming business profitable by September 2024, while simultaneously undertaking cost-cutting efforts including thousands of simultaneous layoffs.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
