Disney looks at JV, sale of Star India and Hotstar: Report

Four years after Disney took over Star India from 21st Century Fox, the entertainment conglomerate is looking to divest as the Indian venture, which owns TV channels and a movie production house, is experiencing considerable financial strain.

Disney is exploring various strategic options for Star India, including looking at a joint venture or a sale, according to a Wall Street Journal report. It added that Disney has engaged in discussions with at least one bank to explore ways to assist the growth of its India business while sharing the associated costs. However, it remains unclear which options Disney may ultimately pursue, as the talks are still in the early stages.

Disney, along with its competitors, is shifting its focus towards streaming platforms from traditional TV enterprises. In pursuit of this transition, substantial investments have been made in deals, content, and technology both domestically and internationally, yielding mixed results.

In 2019, Disney acquired the entertainment assets of 21st Century Fox for $71.3 billion, and, in turn, took over Star India and Hotstar, which was crucial for Disney's global expansion of its nascent streaming business.

The deal provided Disney with broadcast and streaming rights for the highly popular Indian Premier League cricket matches, numerous TV channels in multiple languages, and a stake in a Bollywood movie production company. Additionally, Star India's mobile-first streaming service, Hotstar, which initially offered most of its content for free, experienced rapid growth and quickly onboarded 150 million monthly active users, primarily due to the popularity of cricket rights.

Financial strain

However, Disney's Hotstar lost the bidding war last year to Viacom18 for streaming IPL matches.

As a result, the Hotstar service is becoming less appealing and may lose between 8 million and 10 million subscribers in its fiscal third quarter, the WSJ report noted. Star India's revenue for the fiscal year ending September 2023 is expected to decrease by approximately 20% to just under $2 billion, according to WSJ.

Disney also paid $3 billion to retain the rights to broadcast the Indian Premier League on its Star India television network until 2027.

Star India is projected to incur losses during Disney's 2024 fiscal year, according to the report.

Disney has communicated to its investors that it aims to make its streaming business profitable by September 2024, a target set by former CEO Bob Chapek and supported by current CEO Bob Iger.