SUMMARY
The Walt Disney Co. owns a 29.8% stake in Tata Play via TS Investments, a joint venture with the Tata Group
Disney inherited the stake in Tata Play when it acquired the entertainment business of 21st Century Fox in 2019
Tata Play has filed a confidential offer document for its IPO and is looking to raise INR 2,000-2,500 Cr from the share sale
The Walt Disney Co. (Disney) is reportedly planning to sell its entire stake in Tata Play, India’s largest satellite television operator, during the latter’s initial public offer (IPO). The American entertainment company is looking to focus more on its broadcast and streaming service businesses in India, thereby exiting distribution.
“Nowhere in the world is Disney interested in the distribution business. It is a storyteller,” a source cited by Mint said.
Interestingly, Tata Play, formerly known as Tata Sky, filed a confidential offer document for its IPO with the Securities and Exchange Board of India (SEBI) last month, becoming the first company in the country to do so.
According to the pre-filing document cited by Mint, Disney plans to sell its entire 29.8% stake in Tata Play. The DTH and OTT service provider is reportedly looking to raise INR 2,000-2,500 Cr from its share sale. Tata Play will also be raising some primary capital from the IPO for growth.
As of June 30, 2022, Tata Play had 22 Mn paid subscribers. It posted a revenue of INR 4,741 Cr and a net profit of INR 68.6 Cr in FY22.
Tata, Rupert Murdoch, Disney: Tata Play’s Many Stakeholders
Disney inherited the stake in Tata Play when it acquired the entertainment business of 21st Century Fox from Rupert Murdoch in 2019.
However, India’s cross-media ownership rules don’t allow a broadcasting entity to hold more than 20% equity in local DTH companies, even as India allows 100% foreign direct investment (FDI) in DTH companies.
It is prudent to mention here that Tata Sky was launched in 2004 as an 80:20 joint venture between Tata Sons and Network Digital Distribution Services FZ-LLC (NDDS), an entity of the 21st Century Fox. Murdoch-owned Fox could only hold a 20% stake in Tata Play because India had capped the FDI in DTH at 20% at that time.
While the FDI cap was removed, the cross-media ownership rule remained. However, in 2010-11, the government defined Indian ownership and control regulations, which meant that if a foreign company invested in a DTH company through an investment company, the investment would be considered Indian.
This prompted Tata and Fox to form TS Investments, which saw Fox get an additional 9.8% stake in Tata Play as the joint venture bought a 20% stake in the DTH operator. Fox got additional approvals from the Ministry of Information and Broadcasting to take its stake to 29.8%, which went to Disney in 2019.
However, according to sources cited by Mint, the government has been asking questions about Fox’s – and subsequently Disney’s – 29.8% stake in Tata Play, which prompted the American entertainment conglomerate to exit the joint venture.
In the meanwhile, Baytree Investments (Mauritius), a unit of Temasek Capital, acquired 10% of Tata Play in 2008 and would exit during the IPO as well. Tata group owns the remaining 60.2% stake in the DTH operator.
Apart from the IPO, Tata Play has also made its foray into the over-the-top (OTT) segment with its app Tata Play Binge.
