Disney Estimates Equity Loss from the Indian Joint Venture at $300 Million

Walt Disney, which owns a 37% stake in Jio Star, expects an equity loss of $300 million from its Indian joint venture (JV) with Reliance Industries (RIL) in FY25, driven by purchase accounting, according to the American company's Q1 filings.

Jio Star was formed through the merger of Star India and Viacom18, and it consists of a profitable entertainment business as well as loss-making sports and streaming businesses. The sports division is losing money due to the upfront costs associated with property rights.

In its FY25 outlook, Disney predicts double-digit percentage growth in segment operating income. This includes an increase of $875 million in entertainment Direct-to-Consumer operating income, which is due in part to a favorable comparison to a $200 million negative impact from Disney+ Hotstar in India last year.

Following the merger, Disney deconsolidated Jio Star from its financial results beginning in the first quarter. In the first quarter, the company reported a $33 million equity loss from the India joint venture, primarily due to purchase accounting.

The primary causes of Disney's Q1 decline in international advertising and subscription revenue was 29% drop in advertising and a 14% decline in Star India subscriptions.

The absence of cricket matches caused Star India's sports revenue to drop from $399 million to $39 million in the first quarter. Nonetheless, its sports division turned a $9 million operating profit, reversing a $315 million loss from the year before.

In Q1 FY25, Disney+ Hotstar's advertising revenue in India dropped significantly to $15 million from $165 million in Q1 FY24.