New Delhi: In a deal that could reshape the entertainment business globally, Walt Disney Co. has agreed to buy Rupert Murdoch’s 21st Century Fox Inc. for about $52.4 billion in stock on Thursday.
In India, the deal means that Murdoch-owned Star India’s businesses, including 49 entertainment channels and 10 sports channels would be absorbed by Disney along with its digital streaming platform Hotstar.
Not just that, Disney would also acquire Star’s stake in direct-to-home platform Tata Sky in India. This would catapult Disney, currently known for its children’s channels and distribution of Hollywood films, into India’s biggest broadcaster.
In investor calls, 21st Century Fox has forecast that Star will report $500 million in operating profit in India in the year to June 2018.
The deal announced on Thursday bodes well for the India market, said experts.
“This is the mother of all media and entertainment deals and will overnight make Disney the number one network in the country. Both Star and Disney will complement each other with missing portfolios in each others’s offerings,” said Raj Nayak, chief operating officer of rival network Viacom18.
“The combined entity can bring many synergies to the table and leverage advertising, distribution, licensing and over-the-top (OTT) revenues besides saving costs on some fronts. The merger will make Disney a formidable powerhouse in the region,” he added. In his previous roles, Nayak has worked with Star as well as consulted with Walt Disney for its entry strategy into India.
Currently, Disney operates eight children and youth entertainment channels in India, namely Disney Channel, Disney Junior and Hungama TV. It operates Bindaas and film channels UTV Action and UTV Movies, the channels it acquired from Ronnie Screwvala’s UTV Software Communications Ltd for $454 million in the year 2012.
Post the deal, Disney, through its streaming platforms Hulu and Hotstar, will reach millions of customers directly.
“The entertainment business is moving towards a direct relationship between consumers and content owners and this deal is testimony to that,” said Jehil Thakkar, partner at management consulting firm Deloitte India.
“It’s a perfect complementary match,” said Sameer Nair, chief executive at content studio Applause Entertainment. “In India, the deal is skewed in Star India’s favour because of its scale and size while globally the scales tip in favour of Disney. Star also has the bigger share of revenue in the country in comparison to Disney’s operation,” said Nair, who has also worked with Star earlier.
Ten days ago, 21st Century Fox named Uday Shankar, chairman and chief executive of Star India Pvt. Ltd, as president, 21st Century Fox for the Asia region. In September, Star India Pvt. Ltd won television, digital, Indian and global media rights to the India Premier League (IPL) for the next five seasons for Rs16,347.50 crore. The company also operates a movie production and distribution company since 2009.
Meanwhile, Disney is currently led in India by country head Abhishek Maheshwari. The company underwent a restructuring exercise under then managing director Mahesh Samat who has now moved into a new role as executive vice president and managing director, Walt Disney International, South Asia. After the restructuring, the company focused on two verticals—Hollywood films and its consumer products business.
“Star India will benefit from Disney’s strong foothold in the licensing and merchandise part of the business as well as get kids content to round up its bouquet. And in India, Disney will get into sports again,” said a media analyst requesting anonymity.
“Star is already mammoth in India. It’s (the deal) a good package for Disney with Hollywood and Bollywood both playing a big part in the combined studio format. Disney will get access to Fox’s massive library of good franchise films. Additionally, Disney will now have a presence in sports, which it didn’t till now,” said a former Disney India executive, who did not want to be named.