Mumbai: Walt Disney-owned Star India Tuesday incurred a standalone net loss of Rs 12,548 crore for the 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.
"The company has estimated the contract with ICC to be onerous as the expected revenue from customers relating to this right as and when the related event is broadcasted/streamed is likely to be less than the cost involved in broadcasting and streaming these events and hence has estimated a loss from future events relating to these media rights to be Rs 12,319.31 crore as of 31 March 2024," Star India said. It added that the judgments and estimates may vary in future due to the uncertainty involved with them.
This qualifies as an impairment under global accounting standards and will be recognised over the coming years.
Star had acquired the ICC TV and digital rights for a whopping $3 billion for a four-year period till 2027. Subsequently, the company sub-licenced the TV rights to Zee Entertainment, which eventually decided against proceeding with the deal after the collapse of its merger pact with Sony Group Corp's India units in January.
Zee’s financial constraints also did not permit a significant investment in an expensive cricket property like the ICC rights.
Stung by Zee's volte face, Star initiated arbitration proceedings against the Punit Goenka-led company at the London Court of International Arbitration (LCIA) seeking $940 million in damages.
Zee, in a September regulatory filing, had refuted Star's claims, stating that the arbitration process was still in its early stages and that the LCIA had yet to determine the company's liability.
Star India, currently in the final stages of merging with Reliance Industries-backed Viacom18, had reported a standalone net profit of Rs 1,465 crore in FY23.
Operating revenue declined by over 6% to Rs 18,587 crore in FY24 from Rs 19,812 crore in the year before, while expenses surged by over 68% to Rs 31,548 crore from Rs 18,724 crore due to the provision for the contract.
The company's advertising revenue dropped by 4% to Rs 10,736 crore, while subscription revenue decreased by over 1% to Rs 6,909 crore.
Star India declined to comment on the financial results.
Meanwhile, Star has also filed an application on 30 September 2024, with the National Company Law Tribunal (NCLT), Mumbai for the amalgamation of Star Television Productions Ltd (STPL), a limited liability company incorporated in British Virgin Islands, with the company.
The merger scheme, which is yet to receive the NCLT approval, was approved by the boards of both companies on 24 September. Once it is approved by the NCLT, the company is required to fulfil conditions specified in the scheme for the amalgamation to be effective.
In May, the Mumbai bench of the NCLT approved the merger of Novi Digital Entertainment, which housed the Disney+ Hotstar streaming business, with Star India.
With all major regulatory approvals from the Competition Commission of India, the NCLT and the Ministry of Information and Broadcasting, Star's merger with Viacom18 is nearing completion, and the leadership team has more or less been finalised.
Currently, Star India owns and operates 77 TV channels across entertainment, sports and kids' categories, in addition to the Disney+ Hotstar streaming platform. Disney+ Hotstar, previously managed by Novi Digital Entertainment, has now been integrated into Star.
Viacom18 reported a net loss of Rs 252 crore for FY24, compared with a net profit of Rs 11 crore in the previous fiscal year. The loss was attributed to significant investments in sports and streaming. Revenue rose 75% to Rs 8,032 crore.
As per the merger agreement, Star India is valued at Rs 26,000 crore and Viacom18 at Rs 33,000 crore. Reliance is set to infuse Rs 11,500 crore into Star India, which will consolidate the TV and streaming assets of both Star and Viacom18.
Following the merger, Reliance will hold a 56% stake in Star India, while Disney will own 37%, and Uday Shankar and James Murdoch's Bodhi Tree Systems will hold 7%. Nita Ambani will serve as the chairperson of the merged entity and Uday Shankar will be the vice-chair.
"The company has estimated the contract with ICC to be onerous as the expected revenue from customers relating to this right as and when the related event is broadcasted/streamed is likely to be less than the cost involved in broadcasting and streaming these events and hence has estimated a loss from future events relating to these media rights to be Rs 12,319.31 crore as of 31 March 2024," Star India said. It added that the judgments and estimates may vary in future due to the uncertainty involved with them.
This qualifies as an impairment under global accounting standards and will be recognised over the coming years.
Star had acquired the ICC TV and digital rights for a whopping $3 billion for a four-year period till 2027. Subsequently, the company sub-licenced the TV rights to Zee Entertainment, which eventually decided against proceeding with the deal after the collapse of its merger pact with Sony Group Corp's India units in January.
Zee’s financial constraints also did not permit a significant investment in an expensive cricket property like the ICC rights.
Stung by Zee's volte face, Star initiated arbitration proceedings against the Punit Goenka-led company at the London Court of International Arbitration (LCIA) seeking $940 million in damages.
Zee, in a September regulatory filing, had refuted Star's claims, stating that the arbitration process was still in its early stages and that the LCIA had yet to determine the company's liability.
Star India, currently in the final stages of merging with Reliance Industries-backed Viacom18, had reported a standalone net profit of Rs 1,465 crore in FY23.
Operating revenue declined by over 6% to Rs 18,587 crore in FY24 from Rs 19,812 crore in the year before, while expenses surged by over 68% to Rs 31,548 crore from Rs 18,724 crore due to the provision for the contract.
The company's advertising revenue dropped by 4% to Rs 10,736 crore, while subscription revenue decreased by over 1% to Rs 6,909 crore.
Star India declined to comment on the financial results.
Meanwhile, Star has also filed an application on 30 September 2024, with the National Company Law Tribunal (NCLT), Mumbai for the amalgamation of Star Television Productions Ltd (STPL), a limited liability company incorporated in British Virgin Islands, with the company.
The merger scheme, which is yet to receive the NCLT approval, was approved by the boards of both companies on 24 September. Once it is approved by the NCLT, the company is required to fulfil conditions specified in the scheme for the amalgamation to be effective.
In May, the Mumbai bench of the NCLT approved the merger of Novi Digital Entertainment, which housed the Disney+ Hotstar streaming business, with Star India.
With all major regulatory approvals from the Competition Commission of India, the NCLT and the Ministry of Information and Broadcasting, Star's merger with Viacom18 is nearing completion, and the leadership team has more or less been finalised.
Currently, Star India owns and operates 77 TV channels across entertainment, sports and kids' categories, in addition to the Disney+ Hotstar streaming platform. Disney+ Hotstar, previously managed by Novi Digital Entertainment, has now been integrated into Star.
Viacom18 reported a net loss of Rs 252 crore for FY24, compared with a net profit of Rs 11 crore in the previous fiscal year. The loss was attributed to significant investments in sports and streaming. Revenue rose 75% to Rs 8,032 crore.
As per the merger agreement, Star India is valued at Rs 26,000 crore and Viacom18 at Rs 33,000 crore. Reliance is set to infuse Rs 11,500 crore into Star India, which will consolidate the TV and streaming assets of both Star and Viacom18.
Following the merger, Reliance will hold a 56% stake in Star India, while Disney will own 37%, and Uday Shankar and James Murdoch's Bodhi Tree Systems will hold 7%. Nita Ambani will serve as the chairperson of the merged entity and Uday Shankar will be the vice-chair.
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