Mukesh Ambani suffers Rs 12548 crore loss after buying Star from Disney, here's how

Mukesh Ambani who is Asia's richest man recently completed a major acquisition deal to buy Star India from Disney. However, the news about Star India's financial state has thrown a wrench into the celebration, with reports of a staggering loss of Rs 12,548 crore for the company. This news comes at a pivotal time, as the merger between Ambani’s media company Viacom 18 and Star India is nearly finalized. The merger will also involve a consolidation of OTT platforms like Jio Cinema and Hotstar, set to emerge as a new media entity.

The financial situation at Star India has raised concerns. According to Star India’s financial results for the fiscal year 2023-24, the company recorded a standalone loss of Rs 12,548 crore between April 2023 and March 2024. This sharp drop follows a profitable 2022-23 fiscal year, in which Star India reported a net profit of Rs 1,465 crore. For the 2023-24 fiscal year, Star’s operating revenue reached Rs 18,587 crore, but the loss overshadowed any positive revenue growth.

One of the main reasons for this poor performance is the cost associated with media rights for the International Cricket Council (ICC) events. Star India had secured TV and digital webcasting rights for ICC events through 2027 at a hefty price of USD 3 billion. To cover this expense, the company made a provision of Rs 12,319 crore in its accounts, which has heavily impacted its financials.

Star India tried to mitigate the expense by sub-licensing the ICC TV rights to Zee Entertainment. At that time, Zee Entertainment was also in merger discussions with Sony Group, and it was expected that Zee would cover the licensing fee. However, the merger deal between Sony and Zee fell through, and Zee is now unable to invest in the ICC telecast license. This has left Star India in a challenging position, prompting them to file a case in the London Arbitration Court against Zee Entertainment’s Punit Goenka. The case is still ongoing, and a decision has yet to be made.

The acquisition deal between Reliance and Disney for Star India is valued at Rs 70,000 crore, marking it as the largest acquisition of a media company in India’s history. While Ambani’s acquisition is significant, the financial challenges Star India faces could add complexities to his plans for growth in the media and entertainment sector.

The DNA app is now available for download on the Google Play Store. Please download the app and share your feedback with us.