iWorld
Disney+ reaches 54.5 mn subscribers; execs pleased with India launch
MUMBAI: The Walt Disney Company (Disney) has witnessed a sharp fall in profit as a consequence of the Covid2019 pandemic. While the giant faced widespread disruption like many other organisations, it has one card in store: the newly launched streaming service Disney+. The streaming service is seeing a fast growth in subscribers, which now stands at 54.5 million as of 4 May. It seems shelter-in-place directive has worked in its favour as the service has added 21 million subscribers in less than two months.
Disney senior executive vice president and chief financial officer Christine M McCarthy said in an earnings call that since they continued launches in several markets between quarter end and 5 May, the subscriber number has also increased reaching 54.5 million. She also added the subscriber mix reflects the same as it did on 8 April when they announced that the service surpassed 50 million subscribers globally.
"At our direct-to-consumer international segment, operating losses were $427 million higher due to the cost incurred for the online launch of Disney+ around the world and consolidation of Hulu. Disney+ launched in the number of European markets in the world which contributed to a total paid subscriber base of 33.5 million at the end of the quarter and we are very happy with our successful rollout in Western Europe and India where we converted our pre-existing subscription base Hotstar service to Disney+Hotstar,” she added. In India, it already accounts for approximately eight million subscribers as per numbers shared last month.
The new Disney CEO Bob Chapek, for whom it was the first earnings, also expressed his ecstasy over the successful rollout in Western Europe and India. “We have been thrilled with the performance of Disney+. Since our initial launch in November, we have continued to expand in other markets. In late march as planned, despite Covid2019, we had an incredible launch in Western Europe followed by a highly successful launch in India,” he added. While in India it was scheduled to launch during the billion-dollar sports event IPL to exploit the Hotstar user base, it launched around scheduled time despite the suspension of the tournament.
“The Hotstar service in India was converted to Disney+ Hotstar, resulting in approximately eight million additional Disney+ paid subscribers. In general, wholesale arrangements have a lower average monthly revenue per paid subscriber than subscribers that we acquire directly or through third party platforms like Apple. In addition, the average monthly revenue per paid subscriber for Disney+ Hotstar is significantly lower than the average monthly revenue per paid subscriber in North America and Europe,” The Walt Disney Company said in a regulatory filing.
Disney’s overall average monthly revenue per paid subscriber for the second quarter stood at $5.63.
"As we will use our branded film and television content on the Disney+ service, we are forgoing certain licensing revenue from the sale of this content to third parties in TV/SVOD markets. In addition, we are increasing programming and production investments to create exclusive content for Disney+," it added in the regulatory filing.
Chapek added that the streaming service will begin rolling out in Japan in June, followed by Belgium, Luxembourg, Portugal in September and Latin America towards the end of the year. He promised that the vast collection of libraries in regional content available will continue to grow. He added that they will continue to make the planned investment that they always had into programming to drive subscription rate and retention.
iWorld
Bill Ackman’s Pershing Square makes $64 billion bid to acquire Universal Music Group
Ackman pitches NYSE relisting plan as UMG board weighs unsolicited offer
The hedge fund has proposed a business combination that values UMG at €30.40 per share, representing a hefty 78 per cent premium to its current trading price. The offer includes €9.4 billion in cash alongside stock in a newly formed entity, with shareholders set to receive €5.05 per share in cash and 0.77 shares in the new company for each UMG share they hold.
Under the proposal, UMG would merge with Pershing Square SPARC Holdings Ltd and re-emerge as a Nevada-based entity listed on the New York Stock Exchange. The move is designed to boost investor visibility and potentially secure inclusion in major indices such as the S&P 500.
Pershing Square Capital Management ceo Bill Ackman argued that while UMG’s operational performance remains strong, its market valuation has lagged due to external factors. “UMG’s stock price has languished due to a combination of issues that are unrelated to the performance of its music business,” Ackman said, pointing to concerns ranging from shareholder overhang to delayed US listing plans.
Ackman also flagged what he sees as untapped potential in UMG’s balance sheet and a lack of clear capital allocation strategy. He added that the market has not fully recognised the value of UMG’s €2.7 billion stake in Spotify, alongside gaps in investor communication.
The proposed transaction would also result in the cancellation of around 17 per cent of UMG’s outstanding shares, while maintaining its investment-grade balance sheet. Pershing Square has said it will fully backstop the equity financing, with debt commitments secured at signing. The deal is targeted for completion by the end of the year.
UMG, however, has struck a measured tone. The company confirmed that its board has received the non-binding proposal and will review it with advisers. It reiterated confidence in its current strategy and leadership under Lucian Grainge, signalling no immediate shift in stance.
The proposal comes at a time when global music companies are navigating evolving investor expectations, streaming economics and capital allocation pressures. For Pershing Square, the bet is clear: sharpen the financial story, relist in the US, and let the music play louder in the markets.
Whether UMG’s board is ready to change the tune remains to be seen, but the spotlight on its valuation just got a lot brighter.
