Disney's India business sale may attract private equity firms, local rivals

Walt Disney Company, which operates several entertainment and sports channels in India, may sell part of its stake in its India business to private equity firms or local rivals looking to expand their footprint, according to investment bankers.

The Wall Street Journal reported on Tuesday that Walt Disney is looking for strategic options for

India, including a joint venture or a sale of its India business, in a sign of strain at the company. Bankers said Reliance Industries -- which owns TV18 Broadcast and JioCinema -- is likely to be one of the suitors for the company, considering it is looking to expand its India business. An RIL executive, however, said the company is not in the race. 

A source in RIL said the company is currently busy consolidating its India business, after it announced the integration of JioCinema into Viacom18 in April. With this, Viacom18 has access to Rs 15,145 crore of cash for its growth, comprising Rs 10,839 crore contributed by RIL group entities and Rs 4,306 crore contributed by Bodhi Tree Systems.

After the Indian Premier League (IPL) this year, Disney Star, which was the official television broadcaster of the league, said around 505 million viewers watched the live broadcast of the matches on television – making it one of the most successful seasons for the company. The company, however, lost the rights for streaming services for the IPL to Viacom18 which resulted in a loss of subscribers for its streaming services -- a cause of concern for Walt Disney Company investors.

Disney Star did not comment on its stake sale plan for the India business. “Private equity companies, which have billions of dollars of cash for investments in India, are likely to be tapped,” said an investment banker.

Two other India-based networks – Sony India and Zee Entertainment Enterprises -- are currently merging their India operations to become the country's largest network with a 27 per cent market share. Both companies are awaiting the court’s approval for the merger. 

In 2019, when Walt Disney acquired 21st Century Fox’s entertainment business for $71.3 billion, the valuation of the India business was pegged at $14-15 billion. “Since then, the valuation of Disney’s India operations has declined sharply as its streaming service -- Hotstar -- has lost customers,” the banker said. Star India is expected to report a 20 per cent lower revenue for the year ending September 30, 2023, to less than $2 billion, analysts quoted by US-based news agency Dow Jones said. The company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) are expected to fall by half in the same period from about $200 million reported last year.