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The Walt Disney Company has reported a $33 million equity loss from its joint venture (JV) in India during the first fiscal quarter of 2025, following the deconsolidation of Star India. This marks a significant change in Disney's financial reporting structure, as it now recognizes only its 37% stake in the newly formed JV with Reliance Industries Limited (RIL), which holds a 56% controlling interest.
India a Drag on Disney’s Financials?
Despite the loss from the India JV, Disney’s performance across other segments remains robust. The company’s Entertainment segment reported an operating income of $1.7 billion, nearly doubling year-over-year. This growth was driven by increased content sales and strong performance from direct-to-consumer (DTC) streaming services.
However, the India JV remains a drag on earnings, with Disney forecasting a full-year equity loss from the venture of approximately $300 million. This expected loss is largely attributed to purchase accounting adjustments following the restructuring of the India operations.
In Q1 FY25, the Indian business contributed just $73 million to the operating income of Disney's Entertainment segment, a sharp decline from the $254 million it reported in Q1 of the previous year when Star India was still fully consolidated. The Sports segment also saw a marked improvement, contributing a modest $9 million, which is a significant turnaround from the $636 million loss reported in FY24.
Challenges in the Indian Market
The challenges faced by Disney in India are particularly evident in its streaming services. Disney+ saw a slight decline of 0.7 million subscribers, bringing its total subscriber count to 125 million. Advertising revenue for Disney’s DTC services also experienced a 2% decline. However, when excluding Disney+ Hotstar in India, advertising revenue grew by 16% year-over-year. The performance of Hotstar continues to be impacted by the loss of the lucrative Indian Premier League (IPL) streaming rights, highlighting the ongoing difficulties Disney faces in the region.
Strategic Outlook and Future Projections
Looking ahead, Disney is projecting high-single-digit adjusted earnings per share (EPS) growth for FY25, despite the losses from the India JV. The company remains focused on expanding its digital footprint, with ESPN’s integration into Disney+ being a key strategy moving forward. While the company is optimistic about its global expansion, the profitability of its India JV remains uncertain, and Disney anticipates making further adjustments in the coming quarters.
CEO Robert A. Iger commented on the quarter's results, saying, “Our results this quarter demonstrate Disney’s creative and financial strength as we advance our strategic initiatives.”
While the restructuring of the India JV is a central part of Disney’s transformation, the full financial impact of these changes remains to be fully realised.
Disney’s ongoing efforts to streamline its operations internationally and focus on digital growth are central to its long-term strategy. However, the future of its India JV and its ability to return to profitability will play a pivotal role in determining the company’s success in the coming years.
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