Disney is SELLING its India-based streaming business for a LOSS of $3 to $12 BILLION dollars. This makes their losses on movies of about $1 billion per year look like a rounding error. This is a disaster.
Disney has reached a preliminary agreement to sell 60% of its Indian media business in a deal that values the overseas operation at $3.9 billion, dramatically less than what it was worth when Disney DIS -0.92%decrease; red down pointing triangle acquired it in 2019.
The entertainment giant signed a memorandum of understanding in late December to merge its India business with Viacom18, a partnership between billionaire Mukesh Ambani’s Reliance Industries, Paramount Global and Bodhi Tree Systems, according to people familiar with the details of the deal. Bodhi Tree is an investment fund founded by media scion James Murdoch and former Disney India chief Uday Shankar.
Under the agreement’s terms, Disney will retain ownership of 40% of its India operations, while Reliance will own 51% and Bodhi Tree will own 9%. Disney’s India business includes the Star India family of television networks and the streaming service Hotstar, as well as a minority stake in the satellite TV company Tata Sky.
Viacom18 will pay about $1.5 billion in cash in addition to stock in return for its stake in the merged company, some of the people said.
The deal, which hasn’t been completed and could change, is expected to close in February, the people familiar with the matter said. Bloomberg earlier reported that Disney was in talks to merge the India business with Reliance’s media business.
The drop in value for the India business is a sign of how difficult it has been for big media companies to navigate a market that is home to 1.43 billion people who speak dozens of languages.
One of Disney’s challenges in India has been determining how much to pay for the rights to broadcast cricket, which was introduced to South Asia in the 18th century by British colonists and has grown into the region’s most popular spectator sport.
The cost of TV and streaming rights to various cricket competitions has risen in recent years, exacerbating the mismatch between the large investment required to supply the country’s hundreds of millions of viewers with original shows and live sports content and the comparatively low prices that most Indian subscribers can afford.
One of Disney’s challenges in India has been determining how much to pay for the rights to broadcast cricket, which has grown into the region’s most popular spectator sport.
When Disney bought most of 21st Century Fox’s global entertainment assets in 2019, the India business was considered a crown jewel of the deal, in large part because Star held several key packages of cricket rights. Estimates by people familiar with details of the deal and third-party analysts pegged its value at the time as between $7 billion and $16 billion.
GAME ON! Nelson Peltz Nominates Himself and Jay Rasulo to Disney’s Board as Proxy Fight Officially Kicks Off. Peltz’s Trian Partners also rolled out what it says is a strategy to turn Disney around.
Peltz’s Trian Fund Management said Disney shareholders have lost about $70 billion in value since the activist ended its first campaign in February. Trian said that it spoke to Disney CEO Bob Iger on Thursday and that the company’s board agreed to meet with the investment firm but wouldn’t grant its request for board representation.
Activist investor Nelson Peltz, who’s looking to shake up Disney‘s board, plans to nominate two directors as candidates for directors of the Mouse House’s board: Peltz himself, and former Disney CFO Jay Rasulo.
“Disney is one of the most iconic companies in the world with unrivaled scale, unparalleled customer loyalty, irreplaceable intellectual property (IP) and an enviable commercial flywheel. However, Disney has woefully underperformed its peers and its potential,” Trian said in a statement.
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