Disney entering Mukesh Ambani’s India orbit is a worry for advertisers
By Andy Mukherjee
Bob Iger’s job is done. The longtime CEO of Walt Disney & Co. has to overhaul cable TV on his second stint. As he said in an interview with CNBC: “The disruptive forces that have been preying on the company for a while are greater than I thought.” India is a good example of rapid obsolescence and how an entertainment juggernaut can still outpace it.
However, Indian advertisers may not be as lucky as Iger, whose contract has been extended for another two years. Perhaps they are staring at the erosion of competition that will affect their promotional budgets in what is expected to be a $6 trillion consumer economy by 2030.
The Wall Street Journal reported last week that Disney is exploring strategic options for Star India, including a joint venture or sale.
The India star came to Disney as part of the $71 billion acquisition of Rupert Murdoch’s 21st Century Fox Inc. in 2019. Since then, the gem has lost some of its luster. Bob Chapek, who succeeded Iger as chief executive in 2020 before his abrupt ouster last November, has failed to hold the online rights to broadcast cricket in the Indian Premier League. Viacom18, a joint venture between Paramount Global and Reliance Industries Ltd. , billionaire Mukesh Ambani, is in the bidding war of 2022.
That was a hit for Disney+ Hotstar. Murdoch’s India team built the digital platform from scratch. Its user base, swollen by the pandemic, reached 61 million last October. But since cricket was its biggest draw, 8 million subscribers left in just six months. Ambani’s JioCinema stood out by putting the 2023 edition of IPL online for free, amassing an audience of 449 million; Next season may see a repeat of the aggressive pricing strategy. It’s no surprise, then, that Reliance is among the companies approached to potentially sell a stake in Star India, according to Bloomberg News. Reliance, which has been associated with Warner Bros Discovery Inc., has not commented. in April to air the Succession series and other shows in India, despite development.
Now might be a good time to sell. Until last year, when Disney owned the TV and live broadcast rights, it collected all of the IPL’s $500 million in advertising revenue annually. not longer. According to Horizons, a marketing industry trade publication, up to 55% of this year’s business went to JioCinema. Star, who still had the right to broadcast IPL matches live, got the rest.
The slip in Hotstar subscriptions and advertising loss prompted Bloomberg Intelligence to peg the value of Disney Star, as the Indian company is now called, at less than $1 billion. This could be a spare change for Disney, which has a project value of $209 billion. However, it’s best to offload the franchise while it’s on a relatively strong footing.
More than half of the country’s 1.4 billion people are now online — usually on their mobile devices — thanks in large part to cheap data plans offered by Jio, Ambani’s seven-year-old telecom network with more than 400 million subscribers. However, the TV is on top. Almost 900 million individuals (210 million households) have access, and more than 60% of them turn on their groups at least once every 24 hours.
What they find on the box is compelling enough to keep them hooked for three and a half hours, on average. In southern India, the daily viewing time extends to four hours. Disney Star’s general entertainment channels, which offer Bollywood-style content and dramas, are market leaders in several regional languages.
Catering to different tastes across a vast geographic area increases programming costs. On the flip side, the advantage of networking is that brands still lack a good idea of the size of the audience they are reaching by placing their commercials on both TV and online platforms. Nielsen measures digital engagement, and the Broadcast Audience Research Council, or BARC, an industry body, provides TV ratings. Nobody eliminates double counting to reach reliable net numbers. There is no US-style overlay for Screen Time. Given the hazy data, the turmoil worrying Iger should make advertisers in India more than a little worried. Media consolidation can work against them.
However, it is an advantageous situation for Ambani. If he gets Star India at a reasonable rate, he can offer bundle deals (TV-plus-online) to advertisers at lucrative rates. Some of the big spenders will be from within the bloc. Reliance’s emerging FMCG brands want to gain loyal customers during the annual three-month cricket festival. Ditto for Telecom, Financial Services and Retail. None of them may mind subsidizing high sticker prices because their spending will remain within the group. Owning both of the sports competition’s media distribution outlets – and controlling advertising money for the remaining four years of the IPL contract – would put the Indian billionaire in first place in the next auction for the rights in 2027.
Before starting Star India, Ambani was keen to acquire its rival network Filesadmin.co Entertainment Enterprises Ltd. However, the beleaguered Filesadmin.co founder decided to merge with Sony Group Corp. Instead of that. That deal has been stuck in a legal and regulatory quagmire for nearly two years, and it’s still not guaranteed to go through. Ambani made the most of the chaos by deepening his talent pool. He’s poached several Iger executives, including Kevin Vaz, the 26-year veteran who joined Viacom18 as its new CEO. James Murdoch and Uday Shankar, former CEO of Star India, have also invested in Ambani’s venture.
If Disney can’t protect its cable TV moat among broadcaster-friendly Indian audiences, it makes no sense to defend it anywhere. While it is still too early to predict the outcome, if Iger and Ambani shake hands over a deal, the country will still be left with an uncomfortable question: Should the tycoon forging a large consumer empire wield so much power over media and advertising—and, by extension, family budgets? ?
Then again, from telecom to transportation, monopoly (or duopoly) is on the rise in almost every sector of the Indian economy. For a small business to reach customers, it may become more expensive in the long run, and those costs will be passed on to individual spenders. But in a country crazy about cricket and Bollywood, cheap entertainment can be a safety valve for many consumers’ anxieties.