Disney Agrees to Sell 60% of India Business to Reliance-backed Viacom18
The Walt Disney Company has agreed to sell 60% of its India business to Viacom18 for $3.9 billion (INR 33,000 crore), according to the Wall Street Journal. The deal is expected to close this month. Viacom18 is owned by Mukesh Ambani, chairman of Reliance Industries (RIL). Walt Disney and Reliance Industries have been in deep discussions to combine their Indian entertainment businesses since December 2023. The businesses, however, were unable to come to a consensus regarding structure or valuations.
Disney agrees to sell 60% India business for INR 33,000 crore
Following rumors of Reliance Industries’ interest, Viacom18, owned by Reliance, the largest tycoon in Asia by Mukesh Ambani, has now finalized the deal and signed a non-binding term sheet to combine their India operations last month. The deal’s value was previously estimated by reports to be $10 billion. The decline in value is partially attributable to a write-off of revenue from Disney’s sale of cricket TV rights to struggling Zee Entertainment Enterprises Ltd., which is currently anticipated to be unable to make the payment. But according to a report this week from Bloomberg, Disney’s business in India are only worth about $4.5 billion, not the $10 billion that the US entertainment giant had previously sought.
Disney facing difficulties in India
Disney’s difficulties with streaming in India were made worse when Viacom18 outbid the American corporation for the IPL rights, paying $2.6 billion to stream the competition through 2017. Disney’s quarterly earnings in August 2023 revealed a 12 million decrease in streaming subscribers in the subcontinent, which was primarily ascribed to Hotstar’s decision to discontinue IPL streaming.
Disney+ Hotstar in India is facing difficulties because of this deal. Subscriptions to the platform have steadily decreased, from 61.3 million in September 2022 to 37.6 million a year later. Contributing factors include the loss of important content like HBO and IPL shows as well as competition from Jio Cinema. Although the sale’s official motivations are still unknown, rumors suggest:
- Priority Shifts: Disney may be refocusing its resources on high-growth sectors like Disney+ and core markets.
- Content Challenges: It may have been challenging to navigate the intricate Indian media environment and obtain well-liked content.
- Financial considerations: Simplifying operations and increasing financial flexibility are two benefits of offloading a part of the company.
Read More: Viacom18 Scores BCCI TV-Media Rights to Broadcast ICT Matches
Increasing Opportunities for Viacom18
The media behemoth is now poised to take a leading role in the streaming wars. This is all thanks to its agreement with Reliance Industries’ Viacom18. Disney, on the other hand, will keep working with other companies. It will create and distribute content while holding a 40% share. Reliance holds a 51% stake, while Bodhi Tree Systems, a venture led by Uday Shankar, the former head of Disney India, and James Murdoch, holds a 9% stake. With this decision, both businesses enter a new chapter in the ever-changing Indian media landscape. The exact course of this strategic change remains to be seen, but the entertainment sector in the area will undoubtedly be greatly impacted.
Other Business Investment Plans
Viacom18 plans to invest approximately $1.5 billion in cash and equity in the stake. Disney owns a portion of the Tata Sky, Hotstar streaming, and Star India networks. The deal, which is expected to close in February, highlights the difficulties in navigating India’s vast 1.4-billion-person market. Disney Star and Viacom18 were reportedly preparing to battle it out for the right to advertise in the upcoming IPL 2024 earlier this month. Disney Star, which will broadcast the IPL matches on its sports channels, is reportedly requesting INR 167 crore and 83 crore for associate and co-presenting sponsorships on standard definition (SD) channels, respectively, according to a report in the Economic Times.
The broadcaster is requesting INR 35 crore for associate sponsorship and INR 71 crore for co-presenting sponsorship for HD channels. In contrast, Viacom18 has maintained its advertising rates at the same level to attract more advertisers. Viacom18 will continue to stream IPL matches for free on JioCinema. For the 2023 Indian Premier League, the company reportedly signed over 500 advertisers.
Hotstar a few years back
For a few quarters, Hotstar ruled the Indian video streaming scene. However, since then, Viacom18, supported by Reliance, has gained traction by paying roughly $3 billion to secure the five-year rights to stream the IPL cricket matches. Disney paid $3 billion to broadcast the content on television for the same five-year rights.
Read More: Walt Disney and Reliance Industries Sign a Non-Binding Agreement
Viacom18 Scores BCCI TV-Media Rights to Broadcast ICT Matches
For the upcoming five years, Viacom18 has been awarded the BCCI’s TV and digital media rights for bilateral India matches played at home. Network 18—owned by Reliance Industries and Paramount Global are partners in Viacom18. The rights, which include TV and digital rights for 88 matches, were purchased for INR 5966.4 crore. Now, the Indian Cricket Team’s home matches will be broadcast live on TV by the Sports 18 network. Jio Cinema will also broadcast live domestic fixtures of the Indian squad on desktop and mobile devices. The online auction took place on Thursday, August 31. With this, Viacom18 will serve as the nation’s official broadcaster for home games from 2023 through 2028.
Congratulations @viacom18 🤝 for winning the @BCCI Media Rights for both linear and digital for the next 5 years. India Cricket will continue to grow in both spaces as after @IPL, and @wplt20, we extend the partnership @BCCI Media Rights as well. Together we will continue to…
— Jay Shah (@JayShah) August 31, 2023
Battle for the media rights
Disney Star and Sony Sports, the only other bidders in the auction, lost to Viacom18 for the rights. Moreover, by acquiring the TV and digital rights to the home series of the national team for the following five years, it has formed a monopoly in the Indian cricket broadcasting industry. Two packages were sold along with the rights.
- Package A comes with TV for the Indian subcontinent. Base Price INR 20 crore.
- Package B offers digital for the Indian subcontinent with digital and international TV. Base price: 25 crore INR
For a total of 88 matches, the aggregate base price is INR 45 crore per game. The final cost per match is anticipated to be between 30% and 40% more than the base cost. There will be 25 Tests, 27 ODIs, and 36 T20 international games played domestically. These matches do not include the games played by the Indian Women’s Team. Viacom18 has the right to broadcast women’s team games for free.
The series between Australia and India in September will mark the start of the next round of BCCI media rights. Australia will play three one-day internationals against India in this series on Indian soil. Sports18 will broadcast these three games on TV. Jio Cinema, however, will broadcast these games on computers and mobile devices.
Previous broadcasting rights scenario
Disney Star last purchased media rights in 2018. It spent INR 6,138 crore (~ INR 60 crore each game) on this. The forthcoming ICC Men’s Cricket World Cup 2023 will be made available to all mobile phone users browsing the service for free to view, according to a previous announcement. The free option is intended for 540 million smartphone users. ICC World Cup TV rights are presently held by Sony Sports Network.
Dominance of Viacom18 and Reliance
Through its TV station Sports18, Viacom18 is a relative newbie in the cricket coverage scene. The Women’s Premier League (WPL) TV and digital rights are also owned by its digital platform Jio Cinema for a total of INR 951 crore till 2027. Additionally, it has purchased for INR 23.758 crore the digital rights to the IPL cycle 2023–27. Additionally, it covers broadcast rights for Australia, South Africa, and the United Kingdom. The rights to broadcast Cricket South Africa matches in India from 2024 to 2031 are held by Viacom18. Viacom18 will pay INR 67.8 crore for 88 matches this time.
Here’s what they said
Roger Binny, BCCI President said,
The recent BCCI e-auction has unequivocally demonstrated the vigour of cricket in India. The remarkable journey of Indian cricket, its meteoric rise in the global sporting arena, owes its success to the unwavering trust that people have vested in the BCCI leadership and its dedicated workforce. With the staunch support and collaboration of every stakeholder within our cricketing ecosystem, I am confident that we will continue to propel the brand BCCI to uncharted territories on the global sports stage.
NP Singh, MD & CEO, Sony Pictures Networks India, extended his congratulations to BCCI and Viacom18 stating,
We extend our heartfelt congratulations to the BCCI for a transparent and efficient e-bidding process and to the winners for securing the bilateral media rights. Our disciplined bid was grounded in market forecasts and a long-term growth strategy. We remain committed to delivering top-tier sporting entertainment as we continue to see growing enthusiasm across various sports genres.
Read More: Disney+ Hotstar Amp Brand Outreach With CTV Targeting
