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Journalism of Courage
The Walt Disney Company’s acquisition of most of Rupert Murdoch’s 21st Century Fox in an all-stock transaction worth $ 52.4 billion could make the post-close behemoth a major disruptor in the online video streaming segment. The acquisition — if it gets past antitrust regulators — will make Disney a major player in the Indian market through Star India, a company owned by 21st Century Fox, and its streaming platform Hotstar. The deal also paves the way for Disney to become part owner of direct-to-home service provider Tata Sky, 30% of which belongs to a Murdoch-owned investment company. Indian Express answers two key questions everyone is asking.
How does the DISNEY-FOX deal impact India?
Streaming
India is among several key high-growth markets in which Disney will now have significant local presence. Once the acquisition process is over, Disney will own 69 channels in India through Star India and its digital streaming platform Hotstar. Owning Star India is expected to give Disney an edge over competitor online video providers such as Netflix and Amazon Prime. For the viewer, that’s greater streaming choice. The deal could also bring Disney movies, sports and video content to Star India channels.
Sport
The deal will transfer to Disney the global broadcast and digital rights of the lucrative Indian Premier League (IPL) for the next five seasons, won by Star India in September for Rs 16,347.50 crore, beating bids from Facebook, Reliance Jio, Bharti Airtel and Sony, among others. Star India also owns the rights to all Board of Control for Cricket in India (BCCI) matches played in India, as well as the rights to broadcast the Pro Kabaddi League and the popular football tournament Indian Super League (ISL). Earlier this month, 21st Century Fox elevated Uday Shankar, chairman and chief executive of Star India, as president of 21st Century Fox for the Asia region.
Television
Disney already operates several children and youth entertainment channels in India including Disney Channel, Disney Junior and Hungama TV. Disney had acquired Ronnie Screwvala’s UTV Software Communications Ltd in 2012, which gave it Bindaas, UTV Action and UTV Movies.
DTH service
Disney will acquire 21st Century Fox’s stake in the DTH platform Tata Sky. Star India and Disney are expected to complement each other with the addition of programmes and channels. Disney India is currently a much smaller player than Star India.
How does the deal benefit Walt Disney?
Online video
Acquisition of 21st Century Fox’s film and TV studios, and their respective libraries, will significantly improve the Walt Disney Company’s content output capability, and uplift its direct-to-consumer or online streaming portfolios. With this deal, the two companies (led by Robert A Iger and Rupert Murdoch, left) which, despite their massive sizes and reach, are essentially ‘old media’ have acknowledged the writing on the wall — that the future of TV and movie viewing is online. The deal combines the vast wealth of movies, TV shows, children’s entertainment, animation videos and sports programming that the two companies already possess, and makes available to the post-deal entity unprecedented muscle to challenge new-age Internet companies such as Netflix, Apple, Amazon, Google and Facebook in the realm of online video. In August, Disney had announced plans to launch two subscription streaming services.
Cost synergies
Disney has said that the deal provides attractive financial benefits that include $ 2 billion in cost synergies, improving the earnings per share for the second fiscal year post close of the deal, and enhancement in the growth profile of the company.
