Expensive buyouts: Why Disney has struggled during its 30-year journey in India

It has been a 30-year journey for The Walt Disney Company in India, one that has been marked by struggles at regular intervals. Most often, the reason has been a lot of money being spent that did not yield commensurate returns.  

The first decade was spent in a joint venture with the K.K. Modi Group to create Buena Vista Television, with the intention of launching three channels. That never took off and operations were largely limited to advertising sales for other networks. By 2001, the two partners struggled to keep the relationship going over Disney’s plan to launch a 100 per cent subsidiary. After the joint venture ended, Disney, at the end of 2004, launched two kids’ channels—Toon Disney and Disney Channel. The big money would be spent soon.

In mid-2006, it acquired Hungama TV and a minority 14.9 per cent in UTV Software Communications. Both the businesses were owned by Ronnie Screwvala, a well-known entrepreneur who cut his teeth in the media business. The stake in UTV was picked up for $15 million and two years later, increased that to 32.1 per cent for around $230 million (the outgo for both was Rs 1,300 crore) and in the process also giving it a 15 per cent stake in UTV Global Broadcasting. In July 2011, Disney made a complete buyout of UTV Software for $454 million (then Rs 2,000 crore).  

Disney was clearly smitten by UTV’s film production business. It turned out to be an expensive transaction. With a not-sound knowledge of India’s film industry and poorly structured deals, Disney did not make money even on blockbuster successes—including the likes of Chennai Express and PK, where huge sums were spent on acquiring global distribution rights apart from spending money on marketing and promotion. The deal would often favour the producer, who gained the most on the film doing well and lost nothing if it bombed. The prominent failures included Fitoor and Mohenjo Daro, which eventually led to Disney, according to media reports, shutting its film production business in August 2016. A veteran film producer says Disney misread the Indian market and underestimated the film fraternity’s smartness. 

None of that deterred the Disney bosses from acquiring Rupert Murdoch’s 21st Century Fox in mid-2018 for $71 billion, with the Indian operations (then called Star India) valued at over $10 billion. Then there was its decision to acquire the television rights for the Indian Premier League (IPL) for over Rs 23,000 crore, even as JioCinema, the OTT platform that won the digital piece, aired it free of cost, which turned out to be a huge blow to Disney. In one stroke, it increased the pressure on television advertising and reduces the subscriber base on Disney+ Hotstar (that number is at 40-42 million subscribers). By the looks of it, there is a long journey ahead with several challenges to overcome.