Disney likely to offload 10% stake in Rs 3,200-crore Tata Play IPO

Disney India may consider offloading around 10 per cent of its shareholding in direct-to-home (DTH) player Tata Play, which is planning to go for an initial public offering (IPO) to raise Rs 3,200 crore, investment banking sources said. Tata Play may file the draft red herring prospectus with the markets regulator by the end of this month.

Disney has around 30 per cent stake in Tata Play, which is the country’s largest DTH operator. India is the only market where Disney has an investment in a distribution platform; it inherited the stake following the acquisition of Rupert Murdoch’s 21 Century Fox in 2019, the sources said.

While 20 per cent is held directly by Disney in Tata Play, 9.8 per cent is held indirectly. Persons in the know said that the company may seek to offload nearly 10 per cent in Tata Play to comply with cross-holding norms in media. 

Though 100 per cent foreign direct investment is permitted in DTH, there is an equity cap of 20 per cent on broadcasters investing in DTH companies. An e-mail sent to Disney India elicited no response until the time of going to press. Among other investors in Tata Play is private equity player Temasek, through an affiliate called Baytree Investments, which holds a 10 per cent stake in the company. The Tata group controls 60 per cent of the company, having brought down its stake by 20 per cent over the years. Key Tata group shareholders include Tata Sons and Tata Capital.

When contacted, a Tata Play spokesperson said the firm had no comment to offer on the matter.  

The private DTH market has faced significant challenges in recent years on account of the rise of video-streaming services, which have made it convenient for viewers to consume media and entertainment content anytime, anywhere. The aggressive push of DD Freedish by Prasar Bharati in the past five years has only compounded matters for private DTH players, experts say.

“Over the past few years, DD Freedish, a free-to-air DTH platform, has become quite popular with households in both urban and rural areas. Families, therefore, are quite happy watching DD Freedish for basic entertainment needs. For more personalised entertainment requirements, individual members in a household turn to video streaming apps. The casualty in all this is the upper end of the DTH market, which is seeing a churn in terms of subscribers," said Shashi Shekhar Vempati, former chief executive officer of Prasar Bharati.

A recent Prasar Bharati report shows that between 2017 and 2022, the subscriber base of DD FreeDish almost doubled from 22 million to 43 million and the numbers continue to inch up as channels line up to associate with it.

In contrast, private DTH operators, including Tata Play, Dish TV, Airtel Digital TV, and Sun Direct, lost as much as 1.6 million paid subscribers in the January-March 2022 period, with their active subscriber base at 66.92 million versus 68.52 million in the December 2021 quarter, according to the Telecom Regulatory Authority of India (Trai). 

In the year-ago period (January-March 2021), the active subscriber base for private DTH operators stood at 69.57 million, according to Trai, which is the regulator for the broadcast and telecom industries in the country.

In January this year, Tata Play undertook a rebranding exercise, extending its services to OTT aggregation and broadband, in addition to DTH. The makeover was aimed at capturing emerging opportunities in media, as well as positioning Tata Play as a content distribution company.