It seems Disney will not sell off their Indiana market Disney+ Hotstar to Reliance Industries. Instead, the two companies have allegedly reached a merger agreement that would give Reliance controlling interest, and allow Disney to retain some ownership and gain some money.
According to Bloomberg’s sources, Disney and Reliance Industries owner Mukesh Ambani, are expected to sign a non-binding agreement for the merger, giving Reliance 51% control in exchange for a cash infusion. Disney will hold the remaining 49%.
Disney has been losing money and subscribers with Disney+ Hotstar. When Disney didn’t retain the rights to Indian Premier League Cricket, they also lost a lot of subscribers. Viacom 18, part of Reliance, has those rights.
Since the costs are lower in India, Disney’s ARPU (Average Revenue Per Unit) is significantly lower than in other markets. So much so that when Disney puts out their ARPU numbers, they exclude India, so as not to lower the number for investors.
For example, ARPU for other markets is about $6.7 as compared to .59 in India. It’s unclear why Disney would want to continue losing money except maybe to avoid losing the 40.4 million subscribers that count towards the numbers they promote to investors and advertisers. Compared to 2022, they have already lost 12.5 million subscribers in India.
Perhaps they are hoping a merger with Reliance would boost the subscriber numbers that they can report in 2024. ARPU will still likely remain significantly lower than other markets even with a merger.
Currently we don’t know the amount Reliance would pay to Disney to merge the two companies and at this point, no comment has been given from either Disney or Reliance on the matter. It’s all just speculation until something has been officially signed or announced. Until then, if true, either party can cancel this deal.
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Source: Bloomberg
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