Mumbai: As per recent media reports (Link - https://tinyurl.com/2f4d65zm), Walt Disney Co. held preliminary talks with potential buyers for its India streaming and television business including Reliance Industries Ltd. Disney has been weighing strategic options for the business including an outright sale or setting up a joint venture; this is very different from their earlier statements wherein, as per CNBC (Link - https://tinyurl.com/bad4uyuc), Bob Iger had spoken about exiting only the linear TV business in India.
We had predicted the above (Viacom18 may want to acquire Star’s TV assets) in our report dated 15 July 2023 (Link - https://tinyurl.com/4mftmwm8) - that due to Viacom 18’s high interest in the media business, they could potentially bid for Star India, and also the potential impact of the same on the Indian ecosystem.
Recent media reports indicate that they may even sell Hotstar (digital business) to Viacom/Reliance, which means even the OTT market may see signs of consolidation, which in turn is a big positive for Z/Sony merged Co. (TV and OTT) once the merger goes through. In the case of Viacom18 and Star, there could be a potential shutdown of multiple channels by CCI (Competition Commission of India), as they have a big overlap on the regional/urban GEC side, as compared to Zee/Sony which had a relatively lower overlap.
If the above were true, on the TV side - Zee/Sony and Viacom18/Star would have an ad revenue market share of 25 per cent and 45per per cent respectively (as of FY22) as the TV industry may turn into a duopoly; on the OTT side, this could be a trigger, as only large global giants like Netflix, Amazon could sustain in this highly fragmented market with players like Jio Cinema/Hotstar and Zee5/Sony Liv on the other side. Consolidation in the OTT industry will lead to a better path to profitability and break even for the OTT platforms, which are currently making hefty losses due to high content costs.
PFA, our report sharing views on Disney’s potential India exit plans.
The credit for this article goes to Elara Capital SVP Karan Taurani.