Reliance In Talks To Buy Majority Stake In Disney's Star Indian Business

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Over the past few months, there have been many reports that Disney has been looking at its options with regards to its business in India, called Disney Star, formerly known as Star India, which it acquired when it purchased 20th Century Fox in 2019. Disney Star includes the streaming service Disney+ Hotstar, film studios such as Star Studios, an array of over seventy linear channels, and much more.

In the past few months, Disney has been having talks with many different businesses, including Sony, Blackstone, Sun TV and New Delhi TV, about potentially selling some or all of its assets in India. According to Bloomberg , Reliance Industries Ltd, which is owned by Asia’s richest tycoon Mukesh Ambani, is getting close to completing a deal to buy Disney Star in a cash and stock deal. Disney is valuing its Indian business at around $10 billion (down from the $15 billion it was worth before Disney purchased it in 2019), and Reliance is valuing the business between $7 and $8 billion.

Disney is still looking to keep a minority stake in the company, but it would sell a controlling stake in Disney Star. But it still may keep hold of some assets. There might also be some regulatory issues that could cause delays with the buyout. We’ve seen with other large mergers that the Indian government might require some assets to be sold off separately.

It’s expected that the announcement of a deal could be made as early as next month. Disney does have a quarterly financial investors call on November 8th 2024, so announcing this deal, could help Disney offset the costs of buying out Comcast’s stake in Hulu, which is estimated to cost around $9 billion. Allowing Disney to basically sell off one business to cover its purchase, allowing Disney to focus on its core markets. Reliance would merge some of its media units into Disney Star.

JioCinema, which Reliance runs, has been a thorn in Disney’s side, having paid billions of dollars to get the Indian Premiere Cricket league rights, which resulted in Disney+ Hotstar losing over 20 million subscribers. Plus, recently, JioCinema also picked up the rights to HBO content, which was then removed from Disney+ Hotstar.

It’s unknown if Disney+ Hotstar will continue in its current setup or be merged with JioCinema. Could Disney+ just operate separately in India, without the Hotstar branding and content, which could move over to JioCinema? There are certainly more questions than answers right now.

So, what does this mean for Disney+ and Hulu around the world?

At the moment, officially, no deal has been announced, and no details on what’s actually going to happen have been revealed. There are many variables and potential outcomes from Disney selling its Indian assets. Selling Star India wouldn’t likely have much impact outside India, other than a potential move away from the Star branding and maybe changing the name of Disney+ Hotstar in some countries like Indonesia.

If Disney does sell off Disney Star, it wouldn’t be a huge surprise to see the Star hub within Disney+ around the world, rebranded to Hulu once Disney completes its purchase from Comcast. Disney has rebranded many linear channels to Star in countries worldwide, which might be another issue that results in more rebranding. While in Latin America, Disney runs a streaming service called, Star+, which is a Hulu & ESPN+ hybrid, but there is always hope Disney unifies Star+ and Disney+ in that region, to be similar to how Disney+ works internationally. The Star brand has only been used by Disney since 2019, and arguably, the brand is very generic and could easily be changed.

Disney is still running Hotstar as a separate streaming service in many countries, including Canada, Singapore and the UK, so those could be included in the deal. Hulu does have some Hotstar content from India, so this could continue to be licensed or eventually removed.

If Disney+ Hotstar was completely sold off, it would obviously have a significant impact on the global subscriber numbers for Disney+. However, Wall Street may prefer this, since a Hotstar subscriber generally brings in less than 60 cents per month, compared to over $7 outside of India. Investors may also like a more leaner Disney, focused on its core brands.

For Disney+ Hotstar subscribers, it does bring up many questions about what happens could be merged together and what the future is for its content. Internationally, it brings the Star branding into question. But ultimately, Disney does seem like its less interested in running a vast linear, streaming and studio business in India, instead treating it like more other countries in the world.

It’s important to note, that no final decision has been made, and Disney could still decide to hold onto the assets, but the Star Studios and linear channels, being sold off does seem much more likely.

Disney Exploring Possible Sale Of Indian Business Home To Star Life And Star Select

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Walt Disney (DIS.N) is exploring options to sell or find a joint venture partner for its India digital and TV business, a source with direct knowledge said on Wednesday.

The talks are in a "very, very nascent" stage and no potential buyer or partner has been approached so far, and it remains unclear how the process will pan out, the person added.

"Talks have begun internally (on) what makes sense to do," said the source, adding discussions were being driven by executives at Disney headquarters in the U.S.

Disney did not respond to a Reuters request for comment. The company's shares closed up 1.6% on Tuesday.

The Wall Street Journal was first to report news of Disney's talks and said the company had reached out to at least one bank about ways to help the India business grow, while sharing some of the costs.

The discussions come at a time when Disney has faced increasing pressure due to the emergence of Reliance Industries' (RELI.NS) streaming platform JioCinema, run by Asia's richest man, Mukesh Ambani. He has been marketing his streaming platform by offering free access to Indian Premier League cricket tournament, digital rights of which were earlier with Disney.

Research firm CLSA has estimated Disney+ Hotstar's subscriber base shrank by nearly 5 million users in India after it lost the digital rights for IPL.

Reliance's broadcast venture Viacom18, which runs JioCinema, also struck a deal with Warner Bros in April for HBO and other popular content such as Succession. Several of these top rated shows earlier aired in India on the Disney platform.

Viacom18's shareholders include Reliance, Paramount Global (PARA.O) as well as Bodhi Tree, which is a joint venture between James Murdoch and a former Star India executive, Uday Shankar.

Disney's India business comprises the Disney+ Hotstar streaming service and Star India, which it took over when it acquired the entertainment assets of 21st Century Fox in 2019.

The source, who declined to be named as the talks are confidential, said it will be difficult to find an outright buyer in India as the enterprise value of the India business was seen around $15-16 billion when Disney took over Fox's business.

Star India, which was rebranded as Disney Star last year, encompasses dozens of TV channels and a stake in a movie production company.

Disney, like its peers in streaming and the wider media industry, is cutting costs as macro economic headwinds weigh on its advertising revenue and subscriber growth.

In February, the company said it would cut 7,000 jobs as part of an effort to save $5.5 billion in costs in a sweeping restructuring of the company.

How The Walt Disney Company Ruined And Killed Off Star On Disney+?

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Star is a content hub within the Disney+ streaming service that is responsible for handling series like American Dad, How I Met Your Mother, Helstorm, Scream Queens, Little Fireflies Everywhere alongside movies like Deadpool, Little Monsters and Vacation Friends.

Before that, the Star brand name was and is currently used in India for original programs and movies which come with linear channels that can be viewed in countries outside the region.

Due to criticism by several consumers regarding the lack of adult entertainment on the platform I mean several shows like Modern Family and Glee weren't present at the time despite fitting the description of Disney+ which was rated family at the time.

 

Star is a brand that catered to consumers aged 18-49 while some regions had to pay extra to view the bulk of entertainment on a seperate service (Hulu or Star+) others were able to view it under a tile on Disney+.

For several months into 2021, as Star began to rollout onto Disney+ in other countries came the attention span The Walt Disney Company had toward the brand. You'd find several adverts for the content under this brand labelled as Disney+ while others were labelled under another property.

From my observation, Star hardly had original content except for where it was deemed relevant which is India and even then most of the content would compliment other tiles on Disney+ and not go for the edgy stuff that would seem less Disney.

 

Worst part in regard to all of this is how some parts of Europe had to phase out the Star brand in favour of Utsav which is based on irrelevant channel only for India to go head with Star as the main company rebranded to Disney Star hopefully there's no mix-up when referring to streamer Disney+ Star.

Last year, it was reported that they'd be exiting the English market in India and likely global which appears to be on some limbo as the reported new channels had been delayed or scrapped but we'll see what happens when those delays eventually hit the surface.

The Walt Disney Company was always about alignment as several Disney channels were sacrificed for Disney+ and ESPN but these inconsistencies just prove that any brand can be mismanaged whether its fresh like Magnolia or old as TCM.