Sony Explores Acquisition of Disney's India Business in Preliminary Talks

16 Oct, 2023

Sony Explores Acquisition of Disney's India Business in Preliminary Talks

Sony Pictures Entertainment (SPE), the global entertainment unit of Japan's Sony Group Corp., is reportedly in talks with Walt Disney Co. regarding a potential acquisition of its India business. This development comes as part of Sony's contingency plan, considering potential delays or failures in its ongoing merger agreement with Zee Entertainment Enterprises Ltd. According to unnamed sources, Sony's parent company in Japan has expressed frustration over the prolonged delay in the Zee merger and has prompted the need for an alternative plan.

Disney Star, a prominent entertainment company in India, operates over 70 multilingual TV channels and the popular Disney+Hotstar online streaming service. Various entities, including Reliance Industries (owner of Viacom18), the Adani Group, and Sun TV Network, have expressed interest in acquiring part or all of Disney's Indian business. As of now, there have been no official responses to email queries sent to spokespeople for SPE and Disney.

Industry experts suggest that Disney's India business might now be valued significantly lower than before due to the evolving global and Indian media and entertainment landscape. While the linear entertainment sector generates over $500 million in profits, the sports and digital segments have incurred losses. Notably, when Disney acquired Star India as part of its $71.3 billion deal to acquire 21st Century Fox from Rupert Murdoch, the Indian business was valued at $17 billion.

Sony's patience with the Zee merger appears to be waning, and they are exploring other options. The changing dynamics in the media and entertainment industry over the past two years, along with the sudden availability of Disney India for sale, have made Disney India an attractive proposition for Sony. These discussions are in their early stages, and Sony will only pursue them if the Zee deal falls through. However, they are not willing to waste any more time, given the high opportunity cost involved.

Disney's India business, which includes Star India and Disney's existing India operations, has seen a decline in valuation due to the departure of key leaders and the discontinuation of content deals with select studios like HBO. Additionally, Disney's decision to hold digital rights only for ICC events, relinquishing its hold on major cricket properties, has further impacted its value.

Recent reports also suggest that Disney has explored selling its linear assets in the US to local broadcaster Nexstar Media Group. In India, discussions have taken place with potential buyers such as Reliance Industries, Adani Group, and Sun TV Network regarding Disney's India business.

Despite these discussions, the Zee-Sony merger continues to progress. Integration meetings with the Boston Consulting Group (BCG) are moving forward as planned, according to anonymous Sony executives.

From Sony's perspective, acquiring Disney India appears to be a more attractive option, given the changing landscape and financials of Zee, as well as potential leadership challenges if the merger proceeds without certain key individuals. However, it's important to note that these discussions are preliminary, and Sony will only pursue them if the Zee merger encounters obstacles.