When Walt Disney acquired twenty first Century Fox from Rupert Murdoch for $71bn in 2019, one of the vital promising long-term companies it took management of was Star India.

Star had robust TV and movie companies — and it owned the printed rights to Indian Premier League cricket matches, guaranteeing enormous audiences for the country’s national sport. It had additionally lately launched the Hotstar app, which introduced streaming to a possible market of a whole bunch of tens of millions of Indian viewers.

“There was excitement about the growth potential” of Star India, mentioned Tim Nollen, an analyst who follows Disney for Macquarie. “That’s not why Disney bought Fox, but that was a very intriguing component to it.”

Now the architect of the Fox deal, Disney chief government Bob Iger, is taking a tough take a look at Star India as he reviews the company’s wider TV holdings.

With Disney dealing with one other 12 months of anticipated streaming losses, an $8.6bn-plus acquisition of Comcast’s stake in Hulu and a US TV enterprise in secular decline, Iger is weighing his choices for Star India, rebranded final 12 months to Disney Star.

These embrace promoting stakes that would depart the US group as a minority investor within the enterprise — or probably shedding its total holding, which may fetch as a lot as $10bn.

Disney is in talks with Reliance Industries, the Indian conglomerate run by billionaire Mukesh Ambani, a couple of potential sale of its Star belongings or a possible three way partnership, in keeping with folks accustomed to the discussions. The talks are in early levels and might not be unique to Reliance, because the US firm sounds out non-public fairness teams, together with Blackstone, about their curiosity in taking a stake within the belongings.

Two media business insiders in India famous Justin Warbrooke, who leads Disney’s worldwide finance, had visited Mumbai in latest weeks.

Reliance, Disney and Blackstone all declined to remark.

Investor enthusiasm for Disney’s India enterprise started to fade final 12 months after the corporate lost the online rights to stream the favored IPL event from 2023-2027. While Disney stored the printed TV rights, the streaming rights went to JioCinema — a three way partnership between Ambani’s Reliance Industries and Viacom18, run by James Murdoch and former Disney India chief Uday Shankar — following a file $6.2bn public sale.

It was a coup for JioCinema as a result of many Indian cricket followers watch matches on their cellphones as a substitute of conventional TV. For Disney, it was a setback: the corporate had used its dominance of IPL matches to construct out its Star TV community, India’s largest, and the Disney+ Hotstar streaming platform.

Last month Disney revealed for the primary time precisely how huge a drag Star’s sports activities enterprise has been for the corporate. Star reported a $444mn working loss within the 9 months ended July 1, excess of for all of its earlier fiscal 12 months when it reported a $237mn working loss. The US firm’s working margin for its sports activities enterprise was 15.7 per cent in fiscal 2022 — however excluding Star and ESPN International, the group would have posted margins of 19.2 per cent.

In distinction, Star’s leisure enterprise has robust viewership and profitability, mentioned Mihir Shah, India head at consultancy Media Partners Asia. “Given the fact that linear TV is profitable and . . . the fact that relatively low-cost local general entertainment now has found a strong resting place on streaming, Disney/Star’s entertainment assets would be attractive to any acquirer or partner.”

But he mentioned losses for Disney’s Indian sports activities enterprise will stay “material in the coming years, largely attributed to the US group’s aggressive bidding in renewing rights, particularly the ICC Cricket rights, which were secured for a staggering $3bn last year”.

Disney+ Hotstar’s variety of subscribers fell 24 per cent to 40.4mn within the fiscal third quarter, and its common income per subscriber was simply 59 cents. That in contrast with $6.01 for Disney’s worldwide streaming companies in the identical quarter.

A former Disney government famous there was scorching debate inside the corporate about “what to do about India”.

“They have the biggest studio in India, a big TV business with Star, in the fastest-growing big economy in the world,” the particular person mentioned. “Some want to sell that because the annual revenue per subscriber is low? It’s crazy.”

Michael Nathanson, an analyst at MoffettNathanson, agreed: “Disney has to be in India.” But he added: “I don’t know if you need to own distribution in India if you’re Disney right now.”

An answer may contain the US group promoting a majority stake to Reliance, permitting it to license its leisure content material to the Indian group.

“I would love them to find a strategic buyer that will take an ownership stake of Star, keep Disney as a minority, and then basically consolidate with an incumbent to improve the economics and to cut down on the competitive dynamics of the market,” Nathanson mentioned.

“You don’t want to have to bid against [Reliance] long-term for sports rights. Sports is the driver of this business and the cost of cricket keeps going the wrong way.”

In October, Disney provided free cell phone streaming of the Cricket World Cup in India in hopes of regaining a few of its momentum after shedding the IPL streaming rights. The technique resulted in a record-breaking 43mn concurrent customers throughout the world cup — an indication of its “technical prowess”, Shah of Media Partners famous.

The rivalry between Reliance and Disney is not only restricted to sports activities rights. Analysts say Disney has additionally suffered from a “brain drain” as Shankar has poached a few of the brightest executives from his previous firm.

“A lot of the talent that was at Hotstar and Star has left for the competition,” Nathanson mentioned. “So you’ve lost a lot of brainpower there, including Uday Shankar and all of his lieutenants. I think it really would be great to find a partner there to take on management and investment.”

Disney in India declined to remark.

Nollen of Macquarie mentioned a deal for Star India may very well be particularly well-timed for Disney given the looming transaction with Comcast over the Hulu streaming service. Last week Comcast put its choice to promote its 33 per cent stake in Hulu to Disney, which must pay a flooring worth of $8.6bn — and doubtlessly billions extra following an appraisal course of that’s anticipated to conclude in 2024.

“Star has been dragging things down,” Nollen mentioned. “It would be nice if Disney could sell something to help fund the acquisition of Hulu. I think investors would be very happy to see some sort of support for that Hulu deal at this point.”

Additional reporting by Antoine Gara in New York