MUMBAI: The Walt Disney Company, which Wednesday declared its third-quarter fiscal 2019 results, has disclosed that Star India posted an operating loss of $60 million due to an increase in media rights servicing costs related to the Indian Premier League (IPL) and ICC Cricket World Cup 2019.
Disney senior EVP & CFO Christine McCarthy noted in an analysts call that “21CF Film Studio and Star delivered significantly lower results than expected.”
McCarthy said: “We estimate Star generated about $150 million of operating income in the 3rd quarter last year.
“Star’s results this quarter came in well below our expectations. And were driven primarily by a meaningful step-up in (media) rights (servicing) costs, for the quadrennial Cricket World Cup and the Indian Premier League as revenue growth was more than offset by the incremental rights expense.”
However, when questioned directly as to why the results at Star were below expectations, McCarthy could not really offer a clear answer.
An analyst asked: “What surprised you at Star? Because those cricket contracts (servicing costs) were known. So was it something more about the performance of those contracts? You know in terms of the ratings of that contract?”
To which McCarthy responded: “It was the quadrenniel Cricket World Cup of course. They have the Indian Premier League, which is ongoing. But this is once every four years for the World Cup. There were a couple of significant games that were rained out. They have insurance coverage for some of those but any proceeds would be in future periods. There was also some weakness in advertising revenue that was related to the local advertising market.”
Offering a big picture view, Disney chairman & CEO Bob Iger said that the addition of Star and Hotstar to its portfolio of businesses would give The House of Mouse a significant presence in India, which, he noted, would soon become the most populous country in the world.
“It’s a huge market with interesting dynamics; notably, a rapidly rising middle class, with a strong and growing appetite for media, especially sports,” Iger said.
Talking about the scale of Hotstar, he said, “To give you an idea of the value of this platform, last quarter, Hotstar had more than 300 million average monthly users, served an unprecedented 100 million daily users and delivered a high-quality streaming experience to 25.3 million simultaneous users, which is a new world record.”
He also revealed that Hotstar will be expanded across South East Asia. “The platform’s broad array of premium sports rights will serve it well over the next five years especially as we expand the service into markets across Southeast Asia,” Iger declared.
