Disney’s Streaming Dream Is Dented With Loss At IPL Media Rights Auction
IPL streaming rights, which were with Disney Star for the past five years, were awarded to Viacom18 for the next five years.
(Bloomberg) -- Walt Disney Co. suffered a setback to its global streaming ambitions after losing a bidding war to retain the rights to broadcast India’s cricket league online.
Online rights to the popular Indian Premier League were awarded to Viacom18, a joint venture between Paramount Global and Reliance Industries Ltd, according to a person familiar with the matter who wasn’t authorized to speak publicly. The New York Times reported the news earlier.
Disney, however, did win the television broadcast rights to the matches in a deal valued at about $3 billion, according to the Financial Times. The newspaper said Viacom18 bought the streaming rights for about $2.6 billion, while the New York Times reported that the streaming deal was almost $3 billion.
Cricket has been a huge contributor to Disney’s global streaming growth. The Disney+ Hotstar service, which broadcasts the Indian Premier League under a contract expiring this year, had 50.1 million subscribers as of April 2. That’s more than a third of the global total for Disney+.
While rival Netflix Inc. lost subscribers last quarter, Disney+ added 7.9 million customers. More than half of those came from Disney+ Hotstar, which is offered in India and several other Southeast Asian nations. Ten additional IPL matches last quarter contributed to a jump in Disney’s international advertising revenue.
Disney didn’t immediately respond to requests for comment. The shares fell as much as 4.6% on Monday amid a broad market selloff. The stock has dropped 38% this year amid investor concerns about the outlook for streaming growth after the drop in subscribers at Netflix.
Sigh of Relief
Still, some Disney shareholders may breathe a sign of relief that the company didn’t win the cricket streaming rights. Subscribers to Disney+ Hotstar pay only 76 cents a month on average for the service. That’s annualized revenue of less than $500 million, making it hard to justify yearly rights fees of $1 billion or more.
Disney, based in Burbank, California, has set ambitious goals of obtaining as many as 260 million subscribers globally by 2024. However, that may be tough to achieve if the company loses the cricket rights, Ben Swinburne, an analyst with Morgan Stanley, wrote in a May 12 research note.
But while the loss of cricket may pressure subscriber growth, he noted that “the profit potential out of India is minimal” and won’t have a material impact on earnings.
Disney Chief Executive Officer Bob Chapek told investors in February that while cricket was an important component of its product offering, new local content the company is developing in India would mitigate the impact if the company lost the rights.
“It’s not like we see that business evaporating if we don’t get it,” Chapek said.
Brandon Nispel, an analyst with KeyBanc Capital Markets, said losing the rights will likely prompt him to cut his subscriber forecast “modestly” because cricket isn’t the only programming driving growth.
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