Fox News was Donald Trump’s biggest ally in the bitterly fought US presidential election in 2016. The president reportedly was concerned when he heard that The Walt Disney Company was acquiring a vast swath of 21st Century Fox, which owned Fox News. To his relief, Fox News and Fox Business were not part of the deal that was sealed in December.
Indian viewers might not care much about who owns Fox News, but the deal could determine the direction in which the entertainment industry in India would be headed. The deal will have a direct impact on the Star India bouquet, which has 58 channels in eight languages, and on Disney’s India portfolio, which includes channels like Bindass, Disney Junior and UTV Movies. Many experts say that in India the deal is skewed towards Star. Indranil Chakraborty, CEO of the television production company Big Synergy, said that was the reason Star India got valued at $14-16 billion in the $52 billion deal. “The whole universe of entertainment is going for a spin. The content aggregators are becoming content producers and distributors. Now, one company will own the consumers, whether it’s Disney or Netflix or any other. In the time to come, there will be only a few big players, and consumers will have to choose their options,” he said.
The deal is significant in more ways than one for the Indian entertainment industry. “First, it will pave the way for stronger broadcasting footprints for two media giants, Star India and Disney, with the former having a strong foothold in general entertainment channels and sports, and the latter dominating the kids’ space. Moreover, Disney will get access to a rich array of Fox’s television and film content, which will enable it to rival existing OTT [over-the-top] players with an incredible content library by venturing into its own streaming service. In addition, Disney will also be able to leverage the content bouquet of Star India’s OTT service, Hotstar, which will be in a win-win deal as far as digital broadcasting rights are concerned,” said Apoorva Mehta, CEO of Dharma Productions. In 2015, Dharma Productions signed a nine-film deal with Fox Star Studios, a joint venture between 20th Century Fox and Star India. Fox Star had nine Indian releases in 2017. Its 2018 slate has seven films, including the Sanjay Dutt biopic.
On the other hand, Disney has not produced an Indian film after the 2017 release Jagga Jasoos. “Now Disney will consolidate its production business in India with Fox Star under its portfolio,” said Divya Radhakrishnan, managing director of Helios Media. “Disney’s Indian movie business began only after it acquired UTV, which was totally driven by Ronnie (Screwvala) and Siddharth (Roy Kapur). After their exit, possibly Disney was in a space where it felt it lacked a focus area. That issue has now been taken care of by Fox Star coming into place. If Disney didn’t want to be in the Indian movie business, it wouldn’t have acquired UTV (in 2009) in the first place. And today, it’s not necessary that it produces only movies; it can be content for the web or any other kind of production.”
The emergence of the telecommunication companies as content producers and distributors has only made the competition tougher. “You have Reliance’s MyJIO bouquet with apps like JIO TV and JIO Cinema. Besides they are going for tie-ups with production companies like that of Siddharth Roy Kapur and Ekta Kapoor. Reliance can become a big force considering it owns Network18 and is a huge stakeholder in Viacom18. You also have Vodafone Play and Airtel TV that may soon become strong contenders for content consumption,” said Chakraborty.
Hotstar has some 100 million viewers in India—that is just behind YouTube. “Hotstar got its impetus with the Indian Premier League, not originally produced content,” said Radhakrishnan. But, she believes, that is going to change. “After watching international content on Netflix and how Amazon Prime Video is trying to step up by talking to anybody and everybody in India, I think it is going to change the market completely,” she said.
Three months ago, Disney had plans to start its own streaming service by 2019. However, after the Fox deal, it will have 60 per cent stake in the streaming platform Hulu, which has big plans for India. Originally, Disney-ABC Television Group owned 30 per cent in Hulu, Fox owned 30 per cent, Comcast owned 30 per cent, and Time Warner owned 10 per cent.
Analysts are curious how Hotstar and Hulu will be balanced in India. “But, as of now, Hotstar is more of a catch-up TV as it has humongous amount of television content, followed by sports, which Star India has wisely pushed. It is also licensing a lot of international movies as well as series like Game of Thrones. Now the only thing that we have to see is whether they’ll be betting on original content like Amazon Prime Video or Netflix or some of the homegrown OTT platforms that will balance their presence. My sense is that it’s a question of time whether it will be Hotstar or Hulu on which they will push original content,” said Chakraborty.
A media analyst compared this to Coca-Cola’s return to the Indian market in 1993 and its purchase of Parle, which owned the more popular Thums Up brand. “Both Hulu and Hotstar may have to coexist in India because neither is going to be lesser than the other,” he said. “Disney will have a huge presence in India, larger than what they’ve ever had here. It will be among the top four, or maybe it will be Disney versus the other three big players [Viacom 18, Zee and Sony Pictures Network].”
* Walt Disney takes over most of 21st Century Fox' assets for $52.4 billion (plus $13.7 billion in assumed debt) in an all-stock deal.
* The enterprise value of the deal is $69 billion.
* The transaction includes Twentieth Century Fox movie and TV studios, most of its cable networks and international assets.
* Fox network and Fox News are not part of the deal.
* The merger will see Disney grab rights to a number of Fox-controlled film franchises.
THE INDIA PLAY
* Disney will absorb Murdoch-owned Star India’s businesses.
* 49 entertainment and 10 sports channels will go to Disney along with streaming service Hotstar.
* Disney will also acquire Star’s stake in DTH platform Tata Sky.
* Before the takeover, Disney operated 8 children and youth entertainment channels in India.
* Disney’s portfolio included Disney Channel, Disney Junior & Hungama TV.
* It also operates Bindaas and film channels UTV Action and UTV movies.