Walt Disney is reportedly exploring various strategic options for its Star India business, with potential plans for a joint venture or a sale, according to sources familiar with the matter cited by the Wall Street Journal. The company has engaged in discussions with at least one bank to identify opportunities for the growth of its India business while also sharing some of the associated costs.
Although the talks are still in the early stages, it remains unclear which specific options Disney might pursue in relation to its Indian operations. The conglomerate's India business consists of the popular Disney+ Hotstar streaming service and Star India, which came under Disney's ownership following its acquisition of the entertainment assets of 21st Century Fox in 2019.
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The WSJ report indicates that Star India's overall revenue for the fiscal year ending September 2023 is anticipated to decline by approximately 20 per cent, settling at just under $2 billion. Additionally, its earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to decrease by roughly 50 per cent compared to the previous year, falling from around $200 million.
The report further reveals that Hotstar is expected to experience a loss of 8 million to 10 million subscribers in its fiscal third quarter. These developments underscore the challenges faced by Star India, which was rebranded as Disney Star in the previous year. The media conglomerate's India business encompasses a wide range of television channels and holds a stake in a prominent movie production company.
Disney, along with other industry players in the streaming and media sectors, is proactively implementing cost-cutting measures due to the adverse impact of macroeconomic factors on advertising revenue and subscriber growth. In February, the company announced a significant restructuring effort aimed at saving $5.5 billion in costs, resulting in the elimination of 7,000 jobs.
The news of Disney's exploration of strategic options appears to have had a positive effect on investor sentiment, as the company's shares closed up by 1.6 per cent on Tuesday.
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