Report: Disney Agrees to Non-Binding Terms for Sale of Star in India
Disney has been looking to sell off its Indian streaming operations for months, and a new report indicates it’s nearing completion of that process.
Disney isn’t used to struggling financially as a company. But these days, things aren’t so rosy at the Mouse House outside of its parks division, as its movie studio and streaming operations are not exactly driving the company’s finances into the black. A new report from the Economic Times indicates that the company could be closing in on a sale of its Indian streaming service Hotstar and linear channels.
- Economic Times reports Disney has agreed to a non-binding terms sheet with Reliance Industries Ltd.
- The first public reports of Disney’s talks with Reliance bubbled up in October.
- Disney gets good scale from its Indian business, but the average revenue per user it makes there leaves it willing to sell.
Is Disney Pulling Out of India?
The Economic Times report indicates that Disney and Reliance Industries Ltd. signed a non-binding term sheet that outlines the framework of the sale. The terms call for a 51:49 stock-and-cash merger, and the two companies are aiming to have it completed by February.
The Streamable first reported on talks between Disney and Reliance in October, and the deal will likely encompass Disney’s streaming and linear operations in India. Getting majority control over Disney’s Indian linear channels would give Reliance both TV and streaming rights to Indian Premier League Cricket; surrendering those streaming rights led to three straight quarters of global subscriber losses at Disney+, even though the platform saw growth in nearly every other region.
The move to sell Disney+ Hotstar in India is part of a larger global review of assets by Disney. In the United States, that review has led the company to listen to offers for ABC and other linear channels, as well as potentially purchase a smaller bundle of NBA games in its next broadcast contract with that league.
Why is Disney Willing to Sell Hotstar in India?
Average revenue per user (ARPU) is the magic metric in the streaming industry nowadays. This critical number indicates how much a platform pulls in per subscriber, and it’s one of the key factors in the profitability equation that all streaming platforms are trying to crack.
Disney+’s ARPU around the world is $4.44, which is far enough away from the $16.29 that Netflix makes from its North American customers for the comfort of Disney executives. But in India, Disney’s ARPU sits at a minuscule $0.59 thanks to the low price point of Hotstar, and that makes it expendable as the company tries to enhance profitability from its streaming operations.
Having extra cash in hand will allow Disney to reinvest in ESPN as it tries to create a cable-free, streaming-based version of those channels. It could also decide to put that money into parks, its movie studio, or wherever else it feels it would help the company most, but it seems clear that using new cash infusions to help achieve the goal of streaming profitability would be highest on Disney’s list.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”