Disney Explores Sale Or Partnership For India Business Amidst Growing Challenges

Disney, the global entertainment giant, is reportedly exploring the possibility of selling or partnering with another company for its India business, according to a Reuters report.

It is still unknown how the process will proceed as the conversations are still in a "very, very nascent" stage and no prospective partner or buyer has been engaged.

The insider claimed, "Discussions have started internally (on) what makes sense to do," and added that officials at Disney's American headquarters were driving the conversations.

On Tuesday, the shares of the company increased 1.6%.

Disney has spoken to at least one bank about ways to support the growth of the India business while splitting some of the costs, according to The Wall Street Journal, which was the first to report on the negotiations.

The discussions take place while Disney is under increasing pressure as Mukesh Ambani, the richest man in Asia, and Reliance Industries' (RELI.NS) JioCinema, a streaming service, have emerged. The Indian Premier League cricket event, for which Disney formerly had the digital rights, is available to all users of his streaming site without charge.

Following the loss of the digital rights to the IPL, research company CLSA predicted that Disney+ Hotstar's subscriber base in India decreased by over 5 million customers.

HBO and other well-known programming, like Succession, were also the subject of an April agreement between Warner Bros. and Reliance's broadcasting company Viacom18, which operates JioCinema. On the Disney platform, a few of these highly regarded shows had previously broadcast in India.

Investors in Viacom18 include Reliance, Paramount Global (PARA.O), and Bodhi Tree, a partnership between James Murdoch and Uday Shankar, a former executive of Star India.

The Disney+ Hotstar streaming service and Star India make up Disney's India division, which it acquired in 2019 when it bought the entertainment assets of 21st Century Fox.

It will be challenging to find an outright buyer in India, according to the source, who declined to be named since the negotiations are private, as the enterprise value of the country's business was estimated to be between $15 and 16 billion when Disney acquired Fox's operations.

Star India, which underwent a rebranding last year to become Disney Star, owns a share in a film production firm and operates a number of TV networks. However, Disney, like other players in the streaming and media industry, is currently facing economic headwinds that are impacting its advertising revenue and subscriber growth. As a result, the company has announced plans to cut costs and undergo a comprehensive restructuring, which includes slashing 7,000 jobs in an effort to save $5.5 billion.