Disney without cricket risks its streaming game

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NEW YORK, March 3 (Reuters Breakingviews) - Cricket has been a magic wand for Walt Disney (DIS.N) in India. The $270 billion entertainment giant holds the exclusive rights for lucrative Indian Premier League cricket, but these are now up for grabs and the Mouse House faces stiff competition. Without the tournament, it can kiss easy subscriber gains goodbye.

When Disney bought some of Fox’s assets in 2019, it mopped up a jewel in Star India’s video-on-demand and streaming service, Hotstar. Rupert Murdoch’s firm had cinched a five-year IPL deal for $2.6 billion in 2017. The two-month series of matches is a major asset of direct-to-consumer product Disney+.

With over 250 million households and nearly as many television-viewing homes, India is a hotspot for media companies chasing scorching streaming subscriber growth. Disney surpassed analysts’ estimates in its latest quarter, logging 130 million subscribers, thanks to India’s Disney+ Hotstar, where subscribers rose 57% year-over-year, three times the pace of the United States and Canada. India accounts for more than a third of all Disney+ customers.

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Disney boss Bob Chapek is keen to retain the IPL in the auction expected in March or April. But he believes that even without cricket he can attract customers with local content and other Disney fare from the likes of the Marvel and Star Wars franchises. He’s sticking with the forecast for Disney+ to have up to 260 million subscribers globally by the end of the third calendar quarter in 2024.

Holding onto the rights will force Disney out of its conservative comfort zone. The winning bid is expected to cost as much as $6.7 billion, according to Reuters read more . Rivals will likely include the joint venture of Mukesh Ambani’s Reliance Industries (RELI.NS) and U.S. media firm Paramount Global (PARA.O), with the backing of James Murdoch and Uday Shankar – two aggressive industry executives who secured IPL rights for Fox. Sony Pictures Networks India, which has agreed to merge with local broadcast powerhouse Zee Entertainment Enterprises (ZEE.NS), will be in the mix too. Amazon.com could be a spoiler.

Without cricket, Disney’s leading position in the market looks in serious doubt. Its chief U.S. rival offers a cautionary warning: Netflix slashed the cost of a basic subscription by 60% in India in December to goose growth. The House of Mouse will have to channel its inner tiger.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

- The Board of Control for Cricket in India will complete the auction of broadcast and streaming rights for the Indian Premier League by March or April, Jay Shah, secretary of the group, told Reuters in an interview published on Feb. 20.

- The rights for the 2023-2027 cycle for the two-month series of matches could sell for 500 billion rupees ($6.7 billion), Reuters reported, citing industry sources.

- Walt Disney, Sony Pictures Networks India and Viacom18, a joint venture between U.S. media firm Paramount and India’s Reliance Industries, are all expected to submit bids.

- Media veterans Uday Shankar and James Murdoch are in talks with Reliance to acquire a stake in Viacom18, the Economic Times reported in January, citing unnamed sources. Shankar and Murdoch said on Feb. 9 that they had formed an investment venture called Bodhi Tree with a commitment of up to $1.5 billion in financial support from the Qatar Investment Authority.

- Disney currently has the rights to the IPL obtained through its acquisition of Twenty-First Century Fox’s international and entertainment assets, including in India. Fox’s Star India paid $2.6 billion in 2017.

- Disney is participating in an investor conference hosted by Morgan Stanley on March 7.

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Editing by Una Galani and Oliver Taslic

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