03 March 2024 – The merger of Star India and Viacom18, facilitated by the collaboration between Reliance Industries and Walt Disney Company, has the potential to establish a media giant. While the entertainment divisions are expected to flourish, sports and streaming components might encounter losses, as per findings in a recent report.
Financial Projections:
Media Partners Asia (MPA) forecasts that the combined entity from the Star-Viacom18 merger is likely to yield $2.8 billion in revenue for fiscal 2024. However, a pro forma analysis suggests an estimated loss of $200 million before interest, tax, depreciation, and amortization.
The entertainment business, encompassing popular channels like Star Plus and Colors, is anticipated to contribute positively, generating approximately $600 million in EBITDA on $1.3 billion in revenue.
The TV sports sector, inclusive of Star Sports and Sports18, is projected to incur an operating loss of $600 million against $700 million in revenue.
The streaming video segment, housing platforms such as Disney+ Hotstar and JioCinema, is expected to generate $800 million in revenue but may experience an EBITDA loss of $150 million.
MPA highlights challenges faced by Star India’s sports business, attributing losses to the $3 billion TV rights deal with the International Cricket Council and the termination of a sub-licensing agreement with Zee Entertainment. Star India’s sports division reported an increased operating loss of $432 million in FY23.
Conclusion and Future Prospects:
The proposed merger, set to finalize in late 2024 or early 2025, pending regulatory approval, positions the combined entity to capture significant market shares in both broadcast and streaming. While facing short-term challenges, the synergies expected post-merger could pave the way for long-term success, solidifying the entity’s standing in the dynamic media landscape.
