India is no longer important to Disney!

Recent developments highlight CEO Bob Iger eager to sell-off legacy business assets in a bid to position Disney as a streaming first company

✏ It’s about signaling to investors the time has come to stop thinking about Disney as old media. But Why ? Lets see some facts :-

✏ In 2022, their topline (~83Bn USD) was made up by broadcasting business (~55Bn USD) and rest by parks + products business. While the broadcasting + streaming business grew by 8% YoY, the parks business grew by 73% YoY.

✏ In the same year, their bottom-line (~12Bn USD) was made up by broadcasting business (~4Bn USD) and rest by parks + products business. While the broadcasting business de-grew by 42% YoY, the parks business grew by >100% YoY. Of this 12Bn USD only 400Mn is APAC market earnings making them dispensable both for new and old media.

✏In the above said broadcasting numbers, the traditional media grew 1% in both topline and bottom-line while D2C (new-age) grew 20% at top-line and de-grew 139% at bottom-line. Interesting isn't it ? The double digit growth does makes the valuations hit the roof even though the losses mount (Valuations >>>>> Profits)

✏As quoted by CNBC "Disney’s market capitalization is about $156 billion. The company has about $45 billion in debt. Selling assets can help the entertainment giant lower its leverage ratio while buffering the continued losses from its streaming businesses. Disney also could use the cash to help fund its likely acquisition of Comcast’s minority stake in Hulu."

So, Disney has no interest in :-

✏Old media ( as its de-growing and assets are losing value at very quick pace => ESPN was valued at ~50Bn USD ten years back is now hovering at 20-30Bn USD; Similarly ABC lost its value)

✏APAC markets especially India ( In 2019 Disney bought Star's assets and the show has been dismal; post losing the IPL rights and free IPL streaming by JioCinema they lost >50% paid subscriber base). Coupled with the fact that low ARPU for even top players like Netflix and Amazon Prime make it a bloodbath for SVOD business in new media and AVOD (advertising led) is marred due to economic donwturn! Thus, these APAC markets are not suitable for new media for Disney

This helps us in connecting the dots well why Disney is looking for a strategic partner / full sale / piecemeal transaction to sell India business. While this is all done, what is big and equally happening/longing is the Zee-Sony merger and will Disney's exit make Zee-Sony number one faster ?

Sources and credits :-

- Disney 8K filing (2022)

- The Economic Times Times article titled Disney India sale talks said to draw firms including Reliance

- CNBC article titled Disney asset sales won’t break the bank, but they will move legacy media forward

- Forbes To The Point Podcast dated Jul 17

- Bloomberg article titled Zee-Sony Merger Illegal, Infringes SEBI Order

- Discussion with ex employees of Disney India

(Views expressed are personal)