Do Nothing, Sell Assets Or Find A Partner?

Rumors have been swirling about a potential Disney selloff of some of its legacy media holdings, such as ABC and its owned-and-operated affiliates, to allow the company to focus more on core businesses like its theme parks and media assets that can grow with the times, like ESPN and Disney+.

Less vital but still important to this global company, which has millions of streaming subscribers around the world as well as a physical presence in 30 countries, is its strategy in India, the world’s most populous country.

Disney suffered a blow to its Hotstar service, the Indian equivalent of Disney+, when it lost streaming rights to one of the country’s premier cricket leagues. That has sparked sharp subscriber declines for the service and led many to question whether Disney can stem the tide of desertions.

How it decides to deal with these issues in India could indicate the approach it will take in other parts of the world.

Will Disney Sell Its Indian Assets Or Find Another Answer?

Though Disney still has not confirmed or denied it, the conglomerate is reportedly considering selling off Hotstar and other streaming and TV assets in India. It would track with the strategy of unloading non-core U.S. assets, and it could offset some of the financial turmoil stemming back to COVID-induced theme park shutdowns that prompted the company to lay off thousands of employees this year.

Some see such a sale as almost inevitable, since one of Disney’s greatest strengths—its vast international presence—can also be seen as a detraction in this market. Others say Disney could look at this as an opportunity to mimic a strategy that’s worked for a competitor by buddying up with an Indian company and working together.

“With respect to India, it is a very complex market where your success is contingent upon your understanding of the consumer, the cultural differences, as well as your ability to maneuver through the political landscape,” notes Vikrant Mathur, co-founder of Future Today, which offers advertising video on demand tech and distribution to connected TV platforms.

“It is extremely hard to compete with local players who outrank Disney across each of these three dimensions. Rather than trying to sell its assets, Disney should look to partner with a local media conglomerate that can bring complementary skills to the table—similar to what Viacom did with Reliance.”

Hotstar Subscriptions Have Fallen Fast

A joint venture would allow Disney to maintain a foothold in the market, where it lost Indian Premier League cricket rights to Paramount Global-Reliance Viacom18 Media. Disney did maintain the TV rights to the league, but Hotstar has paid a price—subscriptions plummeted by 24% during the recently ended quarter, and by 4.6 million in the previous quarter.

Disney doesn’t have to act immediately. It can wait to see what partnership offers may emerge or whether subscriptions to Hotstar will keep dropping. Perhaps the worst of the drain is over.

Ultimately, Mathur believes Disney won’t be the only company facing hard choices about its legacy media assets. He predicts Disney will face a struggle trying to “refocus the business back to profitability, cash flow and long-term sustainability.

“As monumental as the ABC sale will be, it makes a lot of sense if Disney rightly believes that it is an asset that is non-core to the company’s future and will continue to depreciate in value over time; sell now while you can still get reasonable value in return and focus the future on theme parks, content and direct-to-consumer distribution,” he says.