Disney CEO Bob Iger says India merger deal with Reliance is ‘best of both worlds’

Table of Contents

Image: Money control

Disney CEO Bob Iger says India merger deal with Reliance is ‘best of both worlds’

The exchange would facilitate Disney’s acquisition of a segment of a larger media conglomerate in India, a burgeoning hub for media and entertainment on the global stage.

Walt Disney’s principal, Bob Iger, has been fervently pursuing the objective of rendering the conglomerate’s amalgamated streaming ventures lucrative by the culmination of the fiscal year 2024. The CEO of Walt Disney Co., Bob Iger, elucidated that the $8.5 billion consolidation with Reliance Industries in the Indian media domain epitomizes the epitome of advantageous circumstances for the entertainment titan, propelling its fiscal gains while mitigating regional uncertainties.

“We harbored an ardent desire to maintain our presence in India. Our commitment to India was profoundly underscored by the substantial investment we made upon acquiring the assets of 21st Century Fox. Undeniably, we stand as one of the foremost media entities in India. Yet, notwithstanding its status as the world’s most populous nation, we are acutely cognizant of the formidable challenges that permeate that market,” articulated Iger during a Morgan Stanley investor symposium on March 5.

Reliance Industries unveiled a collaborative endeavor with Disney on February 28, amalgamating the operations of Viacom18 and Star India to forge one of India’s preeminent television and digital streaming platforms.

Reliance Industries articulated its intentions to integrate the digital streaming and television enterprises of both entities in India to cultivate a preeminent dominion across the realms of entertainment and sports.

RIL and its conglomerate affiliates are poised to secure a controlling interest in the conglomerate, earmarking an investment of Rs 11,500 crore ($1.4 billion) to undergird its expansion strategy. The amalgamated entity is slated to command a post-money valuation of Rs 70,352 crore ($8.5 billion).

Upon finalization of the agreement, India’s premier streaming platforms – Disney+ Hotstar, reigning supreme in the nation’s subscription-based video streaming sector boasting 38.3 million subscribers, and JioCinema, a significant contender in the ad-supported video streaming domain – will fall under a single proprietorship.

Review: Reliance’s aspirations in the realm of video streaming set to receive a substantial boost with the amalgamation of Hotstar and JioCinema.

This amalgamated entity is poised to command approximately 85 percent of India’s viewership for video streaming, as outlined by analysts at the brokerage firm Bernstein.

Iger articulated that this transaction would furnish the American entertainment powerhouse with a stake in a larger media conglomerate in India, one of the globe’s most rapidly burgeoning markets for media and entertainment.

“It represents a harmonious convergence of advantages. We maintain a significant presence in the market. We have forged a robust partnership with Reliance, and we stand to cultivate a business with prospects for growth while concurrently mitigating associated risks,” he elaborated.

In the preceding year, Disney’s streaming service Disney+ Hotstar, under the umbrella of Walt Disney, grappled with stemming the outflow of paying subscribers following the loss of access to pivotal content offerings pivotal for its initial growth in India: namely, IPL streaming rights and premium HBO content, now held by Viacom18’s JioCinema.

Following four consecutive quarters marked by a decline in subscribers, witnessing a decline from 61.3 million in October 2022 to 37.6 million in October 2023, Disney+ Hotstar managed to add 0.7 million paid subscribers in the most recent quarter ending on December 30, 2023, benefiting from heightened usage during the ICC Cricket World Cup 2023.

Drive for profitability

These occurrences unfolded amidst the endeavor of the chief executive officer of Walt Disney to render the combined streaming endeavors of the company profitable by the termination of the financial year 2024.

Iger, who assumed his role at Walt Disney in November 2022, promptly discerned the exigency for extensive remediation within the company. The streaming division of the company was fervently pursuing a global subscriber base over profitability, hence necessitating a robust trajectory toward profit maximization, he articulated.

Last year, Walt Disney reorganized its operations to position creativity as the nucleus of the company and unveiled a variety of cost-saving measures with the objective of attaining approximately $7.5 billion in cost reductions by the conclusion of fiscal 2024. Walt Disney follows a financial year spanning from October to September.

Disney CEO Bob Iger says India merger deal with Reliance is ‘best of both worlds’

Disney CEO Bob Iger says India merger deal with Reliance is ‘best of both worlds’

Iger mentioned that the company is presently in the process of developing technology capable of curtailing costs related to customer acquisition and retention across its streaming platforms.

“When Disney+ was introduced in 2019, our aspiration was to offer comprehensive video experiences at scale, a necessity underscored by the rapid acquisition of 10 million subscribers within the initial 24 hours, eventually reaching 100 million. However, what we lacked was the requisite technological infrastructure to diminish customer acquisition and retention costs, augment engagement, and bolster margins through the reduction of marketing expenditures,” he remarked.

Iger emphasized the necessity to enhance their technological prowess to match that of their competitor Netflix, which he hailed as the “benchmark of excellence”.

“One of the primary reasons behind their significantly superior margins compared to ours lies in their technological infrastructure. Consequently, our marketing expenses are substantially elevated, and our churn rates surpass the optimal threshold,” he elucidated.

Disney’s Grand Universe

In the chilly days of February 2024, Disney unveiled intentions to allocate a staggering $1.5 billion towards Epic Games, the mastermind behind Fortnite, with the aim of constructing an expansive realm of gaming and entertainment.

“In contemplating the future, I discerned a deficiency in our presence within the gaming sphere. While our licensing endeavors have been respectable… I harbored the belief that we possess the capacity for more,” articulated Iger.

This collaborative endeavor entails Epic Games fashioning a Disney-inspired cosmos, affording consumers the opportunity to immerse themselves in the plethora of Disney’s acclaimed franchises, encompassing Marvel, Pixar, and Star Wars, within the span of a few solar cycles.

This multiverse will encompass an assortment of gaming creations birthed by Epic Games, derived from Disney’s repository of intellectual treasures, in conjunction with bespoke creations by Disney, supplemented by an assortment of succinct and protracted visual narratives, alongside consumers’ capacity to procure digital commodities.

Iger expounded upon the notion that this cosmic landscape will coexist harmoniously with Fortnite, the celebrated creation by Epic Games that already boasts various integrations with Disney’s narrative tapestry. Nevertheless, seamless interoperability shall be facilitated between them. “Should one elect to procure digital commodities within one realm, they shall find said acquisitions transposable to the other, and vice versa,” he elucidated.

“This promises to be a lavishly crafted, wholly immersive, captivating odyssey for consumers, and I am of the conviction that it not only resonates with the zeitgeist of youthful consumers’ temporal investments, but also underscores the vast potential for the maximization of our intellectual assets across entirely disparate mediums,” remarked Iger, encapsulating the grandeur of this visionary undertaking.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top