20 Oct

The Walt Disney Group is planning to scale back its activities in pay-television and sport in the Indian subcontinent, as part of its global strategy shift towards its OTT streaming services and self-produced entertainment content, according to local sources.

Disney’s Indian pay-television unit Star India is the region’s leading pay-television broadcaster and also its leading sports broadcaster, with rights for the market’s biggest properties including the Indian Premier League (IPL) and the Indian national team cricket.

The shift away from linear television and sport in India has been reported by local news website Mint, and backed up by local media industry insiders SportBusiness today (19 October).

Disney has not commented on the report, but the news follows two significant, apparently related developments in the last couple of weeks.

Firstly, Disney announced a major corporate reorganisation that makes direct-to-consumer streaming the focus of its media distribution business. The company is currently rolling out its Disney Plus OTT streaming service markets around the world. That service is entirely focused on films and television series, and does not carry any sports content.

Second, a raft of senior executives have announced their departure from Star, including Uday Shankar, the broadcaster’s chairman, and also president of Disney for the entire Asia-Pacific region. Shankar is understood to have played a role in major sports content acquisitions for Star. Shortly after Shankar’s departure was announced, news emerged of the exits of four senior Star Sports executives, including the sports arm’s chief executive Gautam Thakar.

Disney acquired Star, its sister OTT streaming platform Hotstar, and film studio Fox Star Studios as part of its 2018 acquisition of Rupert Murdoch’s global media group 21st Century Fox. Star pay-television channels are available across the Indian subcontinent, and in several other regions around the world including southeast Asia, although the vast majority of their business is generated in India.

Star has made expensive bets on sports content in recent years, which have contributed to recent losses at the company.

The broadcaster seized a dominant position in Indian sports broadcasting by securing the three biggest properties in the market during their current cycles – Board of Control for Cricket in India (BCCI) rights, the IPL, and International Cricket Council (ICC) rights. Star’s sports unit is understood to have been lossmaking in recent years and Star as a whole reported a loss of around $165m in 2019, on revenues of $1.7bn.

One source told Mint: “Sports is going to be a slow burn, there will be no pay off at least for the next 10 to 15 years. It will be a challenge to make even 8 to 10 per cent of what was being made annually earlier and Disney is not the kind to play the valuation game without recovery.”

Despite news emerging of Disney’s waning appetite for sports, Major League Baseball did today announce a two-year World Series rights deal with Star. The broadcaster also recently acquired rights to football’s Scottish Premiership.

Sports content is central to the customer offering on Star’s growing, but also lossmaking, sister streaming platform Hotstar. The platform lost around $75m in 2019, on revenues of just over $150m.

Star, together with Hotstar, is India’s biggest spender on sports media rights and any step back from the market by the company would have a significant impact on competition for sports content.

In particular, the ability of the big three of the BCCI, the IPL and the ICC to generate increases in rights value when they come to market in the next few years would be under question. Star’s main rival in the subcontinent sports rights market, Sony Pictures Networks, was unable to match the financial firepower of its bigger competitor the last time the properties came to market.

Star is not the only Asian sports subsidiary of Disney’s to experience a cooling of interest from the parent company in recent times. Disney has pared back the Fox Sports Asia-Pacific sports pay-television business since its acquisition as part of 21st Century Fox, letting go of most of its senior staff and showing little appetite for spending on content.

Also today, the launch of Hotstar in Singapore was announced. As in its home market, the streaming platform’s content will focus on cricket and Indian television series and films. The service will launch on November 1.

Hotstar is accessible via app on Android or Apple devices, for a subscription fee of S$69.98 ($51.56) per year. It is also available via telco Starhub’s pay-television platform, as part of the Indian Plus package. As a launch offer, Hotstar is offering free streaming of certain IPL matches.

John Stephenson


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