Disney exploring strategic options for Star India; approaches Reliance for a stake says Bloomberg report

Disney, as per a WSJ report, is exploring strategic options for its Star India business, including a joint venture or a sale.

The media giant paid $71.3 billion in 2019 for entertainment assets of 21st Century Fox, which included Star India.

Disney has spoken to at least one bank about ways to help the India business grow, while sharing some of the costs, according to people familiar with the matter. The talks are in the early stages and it is unclear which options, if any, Disney might pursue.

The report says Disney’s fortunes changed after it lost a bidding war for the Indian Premier League (IPL) to Viacom18, and without it, the service became less appealing to subscribers.

Another report by Bloomberg says that among the companies that have been approached for a potential stake sale also include Reliance- the company that is in a partnership with Warner Bros and defeated Disney Star in a bid for IPL's digital rights.

Hotstar is expected to lose 8 million to 10 million subscribers in its fiscal third quarter, some of the people familiar with the matter said.

Star’s overall revenue for the fiscal year ending September 2023 is expected to drop around 20% to slightly less than $2 billion, the people said. Its earnings before interest, taxes, depreciation and amortization is expected to fall roughly 50% for that time period, from about $200 million last year, they said. It is a sharp decline from Fox’s projections before the deal that Star India would earn $1 billion in Ebitda by 2020.

Disney, as per WSJ, earns far less per streaming customer in India than in the U.S.

Hotstar generated an average of 59 cents in revenue per subscriber each month in the April quarter, down from an average of $1.20 at its peak in the summer of 2022, according to Disney earnings reports.