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Tag: Disney

  • Tata group to buy out Disney’s 30 per cent stake in Tata Play

    Tata group to buy out Disney’s 30 per cent stake in Tata Play

    MUMBAI: The mouse house is playing its final hand in India. The Bob Iger headed entertainment major has lined up a deal under which it will be selling its near 30 per cent stake in DTH firm Tata Play to the Tata Group. The transaction values India’s most respected pay TV operator at $1 billion, according to a report by Bloomberg.

    The exit by Disney will allow it to merge its India business with the Mukesh Ambani-owned Viacom18.

    Disney pocketed its holding in Tata Play when it acquired the entertainment business of Twenty First Century Fox from News Corp which landed it the Star India network.

    Tata Play, which has seen in an erosion in subscriber numbers, like most in the pay TV business, thanks to the expansion of the government-owned Free Dish, and cord cutting which has seen in the growth of streaming services.

    It has been looking at unlocking value and attracting capital, and even started the process for an IPO in 2020, which it later dropped.

    With the acquisition of Disney’s 30 per cent, the Tatas will retain total ownership of Tata Play.

  • Kaushal Nanavati and Sumeet Saigal announce the launch of Content Bridge

    Kaushal Nanavati and Sumeet Saigal announce the launch of Content Bridge

    Mumbai: Kaushal Nanavati, with over 24 years of experience in the Indian media landscape, has joined hands with industry veteran Sumeet Saigal launching their new venture, Content Bridge.

    Kaushal Nanavati boasts of a career spanning over two decades across respected media brands like Disney, UTV, Zee and Shemaroo.

    Sumeet Saigal is a renowned figure in the Indian media as a successful aggregator of content among other business interests.

    Both founders bring on board decades of experience in content aggregation, sales, launching TV channels & on-demand services across the globe.

    As the name suggests, Content Bridge will endeavour to bridge the gap – across content, technology and media-related services.

  • Why Disney-Star India aligned with Reliance?

    Why Disney-Star India aligned with Reliance?

    MUMBAI: What was the rationale behind Disney Star India’s decision to align with the Mukesh Ambani-led Reliance Industries? Speaking at the Morgan Stanley Technology, Media & Telecom Conference in the US on 5 March (during a question and answer session,) Disney CEO Bob Iger, gave some insights.

    First he said the mouse house wanted to stay in India. “We made a big investment in India when we purchased the assets of 21st Century Fox. We’re one of the biggest media companies in India. But even though it’s the most populous country in the world, and we felt we want to be there because of that, we also know that there are challenges in that market.”

    He added that the company got a chance to align with Reliance, and he grabbed it fast. “(It) …is obviously the company that has done very well there and one that we respect. And in doing so, end up owning part of a bigger media company. And we believe that, that not only should benefit us in terms of the bottom-line, but derisk us as well there.”

    “So, it’s kind of the best of both worlds. We stay in the market at a significant level. We have a very good partner in Reliance, and we get to have a chance of growing a business and lowering the risk of doing so,” he concluded.

    Now it’s up to time and the new structure to prove whether these reasons were well-founded. 

  • Merger terminated, Sony demands $ 90mn termination fee

    Merger terminated, Sony demands $ 90mn termination fee

    Mumbai: Sony India terminated the merger agreement with Zee Entertainment Enterprisers on 22 January 2024, seeking a termination fee of $ 90mn on account of alleged breaches of merger cooperation agreement (MCA) terms by Zee, invoking arbitration and seeking interim relief against Zee. Zee has denied all such assertions by Sony regarding the alleged breach of the MCA, including the latter’s demand of termination fee. Zee is evaluating all available legal options to contest Sony India’s claims.  

    Stiff competition from digital media and RIL/Disney merger

    We believe the above termination may hit both the parties as both are facing stiff competition from digital media as also potential threat from the merger of RIL-Disney, near term. Zee has reported muted growth/profitability performance in the past two years, as revenue growth has converged (flat in FY20-23) and EBITDA margin dipped to 10.7 per cent (6MFY24), due to: 1) losses in the OTT segment and 2) lower growth in linear TV segment.        

    On the brink of multiple legal proceedings

    Zee had also signed a contract with Disney for sub franchise of sports rights (ICC tournaments) in linear TV. We had estimated related annual losses of ~Rs 15.2bn in FY25E and beyond, given: 1) hefty content cost, 2) lower sports ad revenue and 3) cricket content being available free on OTT. Zee may now not fulfil this commitment (cash balance of mere Rs 6bn, versus potential contractual obligation of Rs 40 bn per year) as it was entered into given its strategic-synergistic contiguity with Zee-Sony merger. Also, Zee could see a hit from related penalty/legal proceedings due to 1) battle with Sony over the non-compete fee, 2) ongoing legal proceedings by various creditors of the Essel group (Axis Finance, IDBI Bank etc.) and 3) dishonouring of contract with Disney.

    Valuation: Downgrade to sell; TP pared to RS 170

    Zee may see a sharp de-rating in P/E valuation of its broadcasting business to at least 10x one-year forward or lower, due to the unfinished merger, as: 1) linear TV growth has converged sharply, 2) Zee may not have any potential to scale-up OTT offering in a highly fragmented market, 3) lower profitability – EBITDA margin, ex-Sports losses, could converge to 14 per cent and 4) any further write-offs on the inventory side or matters pertaining to related parties’ creditors or not honouring the sports contract with Disney (ICC tournaments – Zee could have potentially paid half of the $ 3bn value for TV rights). Merger with Sony was the key valuation driver to move up in the past two years. But given the termination, we downgrade Zee to Sell with March 2025E TP pared to Rs 170 from Rs 340. But if the Disney contract is honoured, TP may move to Rs 130, citing losses in the sports segment. We value the broadcasting business at 10x one-year forward P/E and OTT at 3.0x one-year forward EV/sales. Possibility of any other strategic/financial partner buying majority stake in Zee could provide respite to valuation multiples.

    The credit of this article goes to Elara Capital SVP Karan Taurani.

  • Sony likely to call off merger – a low probability event for now

    Sony likely to call off merger – a low probability event for now

    Mumbai: According to media reports, Sony is expected to call of USD 10bn merger with Zee due to a standoff over whether Zee’s CEO Punit Goenka would lead the merged entity.

    Sony plans to file the termination notice before a 20 Jan 2024, extended deadline for closing the deal, saying some of the conditions necessary for the merger had not been met.

    Discussions are still ongoing between the two sides and a resolution can still emerge before the deadline.

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    We don’t foresee any negative impact of above so far. As per our checks, deal conversations continue and will most likely go ahead without Goenka as CEO; we expect a final clarity on the extension of the deal by third of week of January’24, which is almost a month ahead of the 20 Dec’2023 agreement cut off date. Conversations continue to happen for both parties, however no final outcome has been reached yet on terms of the deal.

    We continue to believe that the deal is equally important for both entities with competitive intensity growing due to Disney/RIL talks gaining traction.

    Maintain our view the likelihood of the deal going through remains high, Zee had made a statement on 20 Dec, 2023 on entering fair negotiations with Sony, which indicates that they too are very much in favour of the deal going through.

    We will await more updates and any official statement from both parties, in case of change in stance. We don’t foresee Sony agreeing on Mr Punit becoming CEO, due to the ongoing investigation against him. However, there is a very small chance of Goenka putting the deal at risk due to him wanting to become CEO, even if term sheet and deal condition mentions that Zee has moved up 50 per cent over the last one year, despite a muted financial performance , largely on the back of valuation multiple re-rating due to the merger with Sony Corp; any potential risk of the merger getting called off by Sony will have a significant negative impact on valuations.

    Post the change in deal terms/ potential name of a new CEO for the merged Co, shareholder, Board, ROC (Registrar of Companies) and MIB (Ministry of Information and Broadcasting) approval may be needed which may only take a few weeks; our legal experts indicate that a fresh NCLT/CCI approval will not be needed for change in CEO of the merged co; further, as per our assessment – the NCLT/CCI  approval isn’t time bound, which means any potential extension has no negative impact on the merger.

    The credit of this article is attributed to Elara Capital SVP Karan Taurani. 

  • Freemium model in OTT is the future

    Freemium model in OTT is the future

    Mumbai: US subscriber base of Netflix and Disney+ reported growth of 5.4 per cent YoY and 0.2 per cent YoY in Q3CY23, respectively; the international segment outperformed with subscriber growth of 10.5 per cent YoY and 17.0 per cent YoY for Netflix and Disney+, respectively. Netflix continues to lead as it has a paid subscriber base of 247.2mn vs 150.2mn of Disney+. Disney+Hotstar(India and other Asia nations) paid subscribers declined for the fourth consecutive quarter, as it fell 38.7 per cent YoY; Disney+ Hotstar has lost 37 per cent of its paid subscriber base (now at 37.6 mn paid subs) over the four quarters after 1) losing Indian Premier League (IPL) digital rights and 2) offering World Cup content free of cost, which also has led to a loss in paid subscriber base over the past two months. We believe Disney+Hotstar subscriber loss has bottomed and may see mid-single digit growth over the next few quarters based on new content offerings – movies and web series slate. Netflix (US) average revenue per user (ARPU) declined 0.5 per cent YoY whereas Disney+ (US) posted ARPU growth of 23 per cent YoY (on a low base) during the quarter. In India, Disney+Hotstar was the only platform that grew 20.7 per cent YoY to USD 0.7 or Rs 58 per month on low base.

    Focus on cost optimisation driving increased monetisation

    Netflix’s innovative move on paid sharing has reaped rich dividends, as it has led to better subscriber growth, which was 9.4 per cent YoY (average) over the past two quarters since the introduction of this feature in May’23 ; the ad tier model too has received a positive response and can become big, led by connected TV adoption globally, as Netflix also plans to make inroads in the gaming business too. Disney+ has also seen success in the ad supported plan, as 50 per cent of new subscriber addition is on ad-supported model. Disney+ plans to reduce losses in the streaming business and has cut annual content budget by 7 per cent YoY to USD 25bn. Disney continues to evaluate strategic options for its linear TV networks while maintaining focus on cost optimisation and high-quality content delivery.

    Read through for Indian OTT

    Zee5, India’s larger broadcaster peer, too has focused on efficiency in its digital business, as losses narrowed marginally by 8.3 per cent YoY to Rs 2.5bn. India’s OTT market has seen a big disruption post Jio Cinema’s free offering of IPL content, which, in turn, will negatively affect subscription video on-demand (SVOD) revenue growth, as platforms may be unable to raise prices; innovative measures, such as ad-supported streaming and password-sharing initiatives may be the only levers for better monetization. Disney+Hotstar continues to look for a strategic partner, and high probability of the Z-Sony merger, we still believe India’s OTT market will see early signs of consolidation in the near to medium term, which is the only way content cost would climb down and enable platforms to move closer to break-even & profitability.

    The credit of this article goes to Elara Capital SVP Karan Taurani.

  • SAT sets aside SEBI order against ZEE promoters

    SAT sets aside SEBI order against ZEE promoters

    Mumbai: SAT has quashed SEBI’s order of barring Punit Goenka from holding key directorship in listed entities over the alleged fund-diversion case.

    Our view

    Implications of the event

    Scenario 1- This may expedite the Zee/Sony merger process; if SEBI gives a go ahead in favour of Punit Goenka, without going to the Supreme Court, post the detailed order that is to be released tonight. In this case, we expect the record date to be announced around last week of November 23. This in turn means that the listing of the merged co. will happen towards the first week of Jan ’24. Further, with Goenka coming on Board, there will be no need for any changes in the term sheet, or any Board/shareholder approval required for change in CEO; this also means that business will be as usual for ZEE and lesser transition time with little change in senior management.

    Scenario 2- SEBI can also move to the Supreme Court to appeal for a stay against SAT’s order. Further, the SAT order may only mention that Goenka can continue as CEO of Zee or the merged co; however, SEBI’s investigation on grounds of fraud may continue after this relief by SAT. This in turn means that there is still a high likelihood of the merger going through without Goenka. We believe there is a low likelihood of Sony allowing Goenka to continue as CEO of the merged Co, unless the issue with SAT is resolved (in case of SEBI going to Supreme Court). In this case, there may be a delay in the merger too, if Goenka changes his stance  and waits for the outcome of investigation; if Sony does not wait, then merger will go through as usual and the merged co will get listed by Jan’24

    Change in media landscape – a big benefit for Zee/Sony

    With Reliance wanting to acquire Disney, the media landscape on TV/OTT side will see a big consolidation as two large players – 1) TV18/Disney and 2) Zee/Sony could potentially command a market share of 67%/53% (TV18/Disney and Zee/Sony together) on TV/OTT in India; which could shift bargaining power in their favour and help them grow ahead of industry averages, as other players may scale down in the ecosystem

    No overhang of CG issues

    With Sony coming as a parent company, we expect no CG (corporate governance) issues in the future, which in turn will drive re-rating of valuation multiples for Zee.

    The stock has corrected more than 10 per cent from its peak over the last three months post the NCLT approval in Aug’23, citing delay on the merger. We await 1) the detailed order and 2) SEBI’s response on the above judgement order passed by SAT to allow Goenka to be a part of Z to assess the actual impact of the above decision for the merger and Goenka; we have a BUY recommendation on Zee with a Sept 24 TP of Rs 340 – we will await more developments over the near term on above.

    Background of the event

    • On 12 June 2023, SEBI banned ZEE promoters Chandra & Goenka from holding directorial, key managerial roles over allegations of fund siphoning. On 13 June 2023, ZEE promoters approached SAT against the order following which SAT provided SEBI 48 hrs. to file a reply against ZEE’s plea.

    • On 10 July 2023, two weeks of time were provided by SAT to ZEE promoters to file a response against the interim order. Meanwhile ZEE formed an interim committee of senior executives to run operations at the company.

    • On 14 August 2023, SEBI asked for 8 months of time to complete investigation of alleged fund diversion by Zee promoters (due to significant red flags in the transactions between Zee and Essel entities) which was again challenged by ZEE on 26 August 2023.

    • On 27 September 2023, SAT reserved order on the case after hearing from both the parties.

    • On 30 October 2023, SAT quashed SEBI’s order barring Goenka from holding key directorship in listed entities over the alleged fund-diversion case.

    The credit of this article goes to Elara Capital SVP Karan Taurani

  • Mirchi and SBI Life Insurance presents 13 editions of Spell Bee

    Mirchi and SBI Life Insurance presents 13 editions of Spell Bee

    Mumbai: Mirchi, a city-centric music and entertainment company, collaborates with SBI Life Insurance, one of the most trusted private life insurers in India, to present the 13 edition of Spell Bee- ‘Spellmasters of India’. The association provides a meaningful platform for young minds across the country, by encouraging them to pursue their dreams and excel in an invaluable life skill. Being India’s largest spelling competition, Spell Bee, which is open for students from grades fifth to ninth, aims to positively captivate young minds towards honing their skills, nurturing their intellect & boosting their confidence.

    The 13 editions of Spell Bee, will see participation from more than 3,00,000 students from 350 schools across 30 cities. The top 75 students will qualify for the National Semi-Final and only the top 16 will compete in a grand finale, which will be aired exclusively on Disney+. The winner will also have the chance to claim a grand prize of Rs 1,00,000 and an all-expenses-paid trip to Disneyland, Hong Kong.

    Commenting on the launch of 13 editions of SBI Life Spell Bee, ENIL CEO Yatish Mehrishi said, “Over the past two decades, Mirchi has developed a diverse portfolio of properties, shows, and solutions, all aimed at nurturing various communities. As we embark on the 13th edition of Spell Bee this year, it signifies more than an event; it stands as a significant initiative reflecting Mirchi’s unwavering dedication to inspire, engage, and empower young minds across the nation.”

    Commenting on the partnership, SBI Life Insurance chief of brand, corporate communications and CSR Ravindra Sharma stated, “At SBI Life we are continuously exploring opportunities that help liberate individuals to reach their full potential and starting early can have a deeper meaningful impact in an individual’s life. We believe every child has a unique potential to excel, and by providing them with the right tools and platform, we aim to foster an environment of learning & development. SBI Life’s partnership with Spell Bee – ‘Spellmasters of India’ reflects our commitment to liberating young minds in fulfilling their aspirations and enabling them to with the opportunity to be recognised on a universally recognised platform.”

    He further added, “Children are the future of our nation and we are immensely proud to be a part of this educative initiative. We believe that spelling is an extremely important skill that aids in expressing themselves better and more clearly. We are thus, dedicated to encouraging young minds to explore possibilities, not only in academics but in all aspects of their development. This partnership serves as a testament to our unwavering commitment to positively shaping young minds across the nation. We are excited to embark on this journey, to create invaluable future citizens who will contribute to the progress and prosperity of our nation.”

    As a part of the promotion, renowned RJs from Mirchi will make mention of the initiative and other related details on the radio channel to attract participation from schools & parents. Other promotional activities via PR, Digital etc. will follow.

    The Spell Bee – Spellmasters of India initiative is a testament to SBI Life’s commitment to not only provide monetary prizes to the winner but also aid in the holistic development of young minds across the nation.

  • Disney+, Hulu combined would own most hit titles in the US: Ampere Analysis

    Disney+, Hulu combined would own most hit titles in the US: Ampere Analysis

    Mumbai: A combined offering of Disney+ and Hulu would account for the largest share of the 100 most popular titles of any US subscription video on demand (SVoD) service. At approximately 30 per cent, the player would enjoy a comprehensive lead on Netflix’s 23 per cent, according to a recent study by Ampere Analysis.

    Shows from Disney’s Marvel Studios, Lucasfilm, and Hulu Originals, such as Only Murders in the Building and The Handmaid‘s Tale, are among them.

    Will Disney push to close the deal early? The US streaming platform Hulu is currently owned by Disney (67 per cent) and Comcast (33 per cent), who are due to reach a sale agreement in January 2024. However, recent reports suggest that Disney intends to close a deal sooner to take a 100 per cent stake and integrate the streamer into Disney+ as a combined offering.

    The merger seems logical to Ampere’s analysts, as Disney’s share of Hulu content has grown significantly, suggesting that the company has continued to invest considerably in the platform. Since September 2016, the proportion of Hulu’s catalogue for which Disney owns the distribution rights has tripled, from six per cent of all movies and TV shows to 19 per cent by September 2022.

    Meanwhile, the major studios without streaming platforms have reduced their contribution to Hulu’s content slate (down from 81 per cent in 2016 to 71 per cent in 2022), and those with their own streaming services have generally maintained or reduced their input. Specifically, the combined content from NBCUniversal, Paramount Global, and Warner Bros. Discovery now makes up less than 10 per cent of all TV shows and movies on Hulu.

    Title reclamation is posing a threat to Hulu. The removal of content from Hulu to support newer services like Peacock, Paramount+, and HBO Max poses a threat to Hulu’s competitiveness. The streamer has already lost highly popular titles like America’s Got Talent (to Peacock), movies and TV shows set within the Star Trek universe (to Paramount+), and Family Matters (to HBO Max). If major studios reclaim their proprietary content, Hulu could lose 10 per cent of its overall catalogue. This figure rises to 37 per cent of Hulu’s 100 most popular titles, using Ampere’s popularity score metric, which tracks overall online engagement with a title.

    Ampere Analysis analyst Christen Tamisin said, “The threat of further popular or critically acclaimed titles leaving Hulu for rival platforms is a concern as engaging content is critical for subscriber retention, especially as the US SVoD market nears saturation. This risk makes the argument for Disney to merge Hulu and Disney+ into a single platform stronger.

    “On the other hand, Disney+ and Hulu’s complementary catalogues mean a combined platform would have a more diverse content offering—akin to that of other major market players—than the two standalone platforms have currently. While the Disney brand has long been associated with family-friendly content, Hulu has a broader, general-audience appeal, offering a wide range of genres and more adult-targeted titles,” he added.

  • Bob Chapek exits Disney; Bob Iger returns as CEO for two more years

    Bob Chapek exits Disney; Bob Iger returns as CEO for two more years

    Mumbai: US and global media conglomerate Disney has announced that Robert A. Iger is returning to lead Disney as CEO, effective immediately. Iger, who spent more than four decades at the company, including 15 years from 2005-2020 as its CEO, has agreed to serve as Disney’s CEO for two years, with a mandate from the board to set the strategic direction for renewed growth and to work closely with the board in developing a successor to lead the company at the completion of his term. Iger succeeds Bob Chapek, who has stepped down from his position. Chapek spent less than three years as CEO. Chapek’s contract had been extended in June 2022 for three years. The earlier contract had been scheduled to expire in February 2023.

    “We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic. The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period,” said The Walt Disney Co. chairman of the board Susan E. Arnold. “Iger has the deep respect of Disney’s senior leadership team, most of whom he worked closely with until his departure as executive chairman 11 months ago, and he is greatly admired by Disney employees worldwide—all of which will allow for a seamless transition of leadership.”

    The position of chairman of the board remains unchanged, with Arnold serving in that capacity.

    “I am extremely optimistic for the future of this great company and thrilled to be asked by the board to return as its CEO. Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe—most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honoured to be asked to lead this extraordinary team once more, with a clear mission focused on creative excellence to inspire generations through unparalleled, bold storytelling,” Iger said.

    During his 15-year stint with Disney, Iger helped build Disney into one of the world’s most successful and admired media and entertainment companies with a strategic vision focused on creative excellence, technological innovation, and international growth. He expanded on Disney’s legacy of storytelling with the acquisitions of Pixar, Marvel, Lucasfilm, and 21st Century Fox and increased the company’s market capitalization fivefold during his time as CEO. Iger continued to direct Disney’s creative endeavours until his departure as executive chairman last December, and the company’s pipeline of content is a testament to his leadership and vision.