Disney to cut back on TV, sports biz in India

Media and entertainment conglomerate Walt Disney is likely to scale down its television broadcasting, sports catalogue and film studio business in India, said two people familiar with the development, declining to be named as the plans are not public. The move comes close on the heels of top executive Uday Shankar stepping down as president, for the APAC (Asia and Pacific) region and chairman, Star and Disney India earlier this month, accompanied by a global announcement that stated the company’s intention to reorganize its media and entertainment businesses to “focus on developing and producing original content for the company’s streaming services.” The announcement was made in a blog on its website.

Disney India did not respond to Mint’s queries on its strategy for the country. However, the focus on its video streaming platform Disney+ Hotstar is evident from the mammoth movie acquisitions made during the pandemic, including titles like Laxmmi Bomb and Bhuj: The Pride of India, some with a price tag of Rs120 crore, plus the spate of originals it is dishing out.

For starters, the television business could see some rationalization in terms of fewer channels. Niche genres such as English entertainment and lifestyle are expected to take a hit post covid, and Star World likely to go off air soon, though there has been no official announcement on it yet.

Walt Disney acquired 21st Century Fox Inc. in a $71 billion cash and stock deal in June 2018, which made Star India, Fox Star Studios, and Hotstar part of Walt Disney in India.

“One could expect the global leadership to take a fresh look at India in terms of streaming and question the growth of TV given that television broadcasting is in terrible shape in the country,” said one of the persons mentioned above referring to the introduction of the new tariff order (NTO) by Trai (Telecom Regulatory Authority of India) in February 2019, that had a negative impact on the industry. Trai’s move faced flak as it raised the price for consumers for like-for-like entertainment. The NTO was aimed at allowing consumers to choose a la carte channels and hence bring their cable bills down as it mandated that each channel should be priced individually. However, it resulted in the opposite, besides accelerating the shift of young, urban audiences online, particularly during the pandemic.

A senior executive from a broadcast company said covid 19 has also been a huge blow for the sector with cable operators and MSOs (multiple system operators) not sharing the revenue generated from subscribers with broadcasters for their pay channels and no mechanism to monitor them.

Further, the IPL (Indian Premier League) may be grabbing its own share of eyeballs but monetizing the sports catalogue is going to be a challenge for the next couple of years with the uncertainty around the sports business, in general, in a world wrecked by covid restrictions. The past week saw four top level executives of Star Sports in India quit, including president and CEO Gautam Thakar, Ashok Namboodiri, business head, regional sports network, Rajiv Mathrani, marketing head and Rupali Fernandes, emerging sports.

While executives at Star refer to these exits driven by personal decisions, media industry executives say there is more than meets the eye. While the cost of organizing the tournament has risen drastically, there still aren't many avenues where cost-cutting can be done. The future of ticketing and sponsorship also remains uncertain.

“Sports is going to be a slow burn, there will be no pay off at least for the next 10-15 years. It will be a challenge to make even 8-10% of what was being made annually earlier and Disney is not the kind to play the valuation game without recovery,” the second person mentioned above said.

The other big pull back will be on the film studio front. While Disney itself had halted all local film production in India in 2016 after debacles such as Mohenjo Daro and Jagga Jasoos, the acquired arm of Fox Star Studios has been aggressive for the past few years, with hits like Sanju, Prem Ratan Dhan Paayo, Jolly LLB 2, Badrinath Ki Dulhania, Judwaa 2 and Housefull 4, and partnerships with home-grown production houses like those owned by Karan Johar, Sajid Nadiadwala, Rajkumar Hirani and Vidhu Vinod Chopra. Fox Star currently has one film on the floors, Karan Johar’s superhero flick Brahmastra starring Ranbir Kapoor and Alia Bhatt to be directed by Ayan Mukerji.

“Indian studios and now, actors, are unlikely to ever share IPs (intellectual property rights) with foreign companies,” the first person mentioned above said explaining that despite buying films off local producers and spending on their distribution and marketing, companies like Disney still cannot monetize them in the future.

“They would focus on distributing their Hollywood offerings dubbed in local languages,” the person added.