Star India’s new parent company, The Walt Disney has responded to the hefty losses it has occurred in Q3 of 2019 being blamed on incremental increase in sports rights fees.
The operating loss worth $60 million was related to mind-boggling acquisition fees paid for the Indian Premier League (IPL) and the ICC Cricket World Cup 2019. Disney noted that the revenue growth at Star India was offset by the incremental increase in expenses.
Disney Senior EVP and CFO Christine McCarthy said, “We estimate Star generated about $150 million of operating income in the third quarter last year. Star’s results this quarter came in well below our expectations and were driven primarily by a meaningful step-up in rights cost for the quadrennial Cricket World Cup and the Indian Premier League as revenue growth was more than offset by the incremental rights expense.”
“It was the quadrennial Cricket World Cup, of course. They have their 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. And there was also some weakness in advertising revenue that was related to the local advertising market,” Bob Iger, CEO of Disney said about Star India’s performance.
Iger also highlighted that despite the initial setback, there were benefits from the Disney and Star/Hotstar arrangement as it gave them significant presence in India.