In a regulatory filing, the company said this impairment includes non-cash cumulative foreign currency translation losses of around $800 million. It also said it will recognise a non-cash tax charge of approximately $300 million in connection with the close of the transaction between Star and Reliance Industries Limited’s (RIL) Viacom18.
“Star India’s assets and liabilities are classified as held for sale in the consolidated balance sheet as of September 28, 2024, and we recorded $1.5 billion of non-cash impairment charges in ‘restructuring and impairment charges’ in fiscal 2024 to reflect Star India at its fair value less costs to sell,” Walt Disney said.
“The measurement of these impairment charges included non-cash cumulative foreign currency translation losses of approximately $0.8 billion. In addition, in the first quarter of fiscal 2025, we anticipate we will recognise a non-cash tax charge of approximately $0.3 billion in connection with the close of the transaction,” it added.
The merger deal between RIL and Disney to combine the assets of Star India and Viacom18 closed on November 14. The merged entity JioStar, valued at $8.5 billion, will be controlled by RIL with 56% interest, while Disney will retain 37%, and Bodhi Tree Systems, an investment firm, will hold a 7% stake.
The company has been consolidating Star India’s income statement and cash flow activities until the transaction closed.Post-completion of the merger deal, the company will recognise its 37% stake in the joint venture at fair value on its balance sheet and start reporting its share of the joint venture’s earnings under ‘equity in the income of investees, net’, rather than including it in the segments’ operating results.Star India, which was earlier fully owned by Walt Disney, incurred a standalone net loss of Rs 12,548 crore in the last financial year ending March 31. In a regulatory filing, the broadcaster blamed the weak financial performance to a provision of Rs 12,319 crore for an “onerous contract” stemming from the International Cricket Council (ICC) media rights deal.
In fiscal 2024, Star India’s sports business reported a 47% increase in operating losses, totalling $636 million, Walt Disney’s filings show. Despite this, revenue grew by 15% to $841 million, driven by a 40% surge in sports advertising revenue, which reached $444 million.
The growth was primarily due to the broadcasting of two major ICC cricket tournaments in the current year, compared to one in the previous year. However, affiliate revenue declined by 13% to $238 million, affected by reduced effective rates and a smaller subscriber base.
Programming and production expenses soared by 32% to $1.3 billion, primarily driven by increased costs for cricket programming.
The cost spike was attributed to the airing of two major ICC tournaments this fiscal year. This increase was somewhat offset by the absence of costs related to the Board of Control for Cricket in India (BCCI) cricket programming, as the company did not renew those rights.
Disney operates 10 Star branded sports channels in India, in four languages. Star has rights to various sports programming, primarily cricket and soccer. As of September 2024, the estimated number of subscribers to Star branded channels, based on internal management reports, was approximately 79 million.
In fiscal 2025, Disney is anticipating an increase of approximately $875 million in its entertainment DTC operating income compared to fiscal 2024, which includes a comparison against an adverse impact of around $200 million from its India DTC business on fiscal 2024 entertainment DTC results. Additionally, Disney+ Hotstar’s subscriber base grew by 1%, reaching 35.9 million.
Disney has various contractual commitments for rights to sports, films and other programming, totalling approximately $92.2 billion, including approximately $2.6 billion for available programming as of September 28, 2024.
However, this excludes commitments related to Star India businesses that are held for sale of approximately $4.5 billion, primarily related to sports programming rights, Disney said.
