Disney-Star merger results in high profile exits amid twin management styles

Disney-Star merger results in high profile exits amid twin management styles

Despite being the acquired entity, Star India, by virtue of being a Rs 10,000 crore media mammoth, seemed to have a clear upper hand as opposed to Disney India, which is barely a Rs 100 crore business

The Walt Disney Company's $71.3 billion acquisition of 21st Century Fox isn't proving to be a happy marriage for its Indian arms, Star and Disney India.

Despite being the acquired entity, Star India, by virtue of being a Rs 10,000 crore media mammoth (with interests in Hindi and regional TV, sports, studio and OTT), seemed to have a clear upper hand as opposed to Disney India, which is barely a Rs 100 crore business.

Star head honcho, Uday Shankar, was elevated as the Asia-Pacific head of The Walt Disney Company, and earlier this year, Shankar had rejigged the organisation, clearly giving priority to his colleagues at Star India.

However, the Disney headquarter at Burbank, is known to have instructed the Star senior management not to show the door to the senior team members of Disney India. Star India did follow the diktat, but didn't offer them plum roles.

Disney India Country Head Abhishek Mahaeshwari, for instance, was made the head of the company's kids channel portfolio, while Amrita Pandey, Vice-President, Studios and Head Content and Channel Distribution was asked to report to Amit Malhotra, Head, Emerging Markets and Content Sales for APAC. Both moved on.

While Maheshwari joined ed-tech company, Byju's, Pandey is now the CEO of Junglee Pictures.

When the Disney-Fox merger was announced, around 350-odd jobs were supposed to be on the axe. While it's not clear yet how many have been laid off in the middle and junior management, the last few months have seen the exit of senior management from both the Star and Disney stables.

One of the recent exits being Gayatri Yadav, Star India's President of Consumer Strategy and Innovation. Amit Chopra, President and Head, Ad Sales also quit to join Samara Capital in May this year. There have been other senior exits in legal as well as in the sports business.

A former Star employee, who quit post the announcement of the merger, says that there has been massive insecurity among both Star and Disney employees. "The Disney folks felt let down as they were not given plum roles, while the Star employees are not used to the 'passive aggressive' working style of Disney," says this former employee.

Star India is known for its entrepreneurial style of functioning and Shankar takes bold bets, be it his investment in sports or being a first mover in regional television and digital entertainment.

He invested around $1.8 billion for the ICC cricket rights and another $2.55 billion for the Indian Premier League rights, which many industry experts have termed as unnecessarily expensive investments. The company needs to earn around Rs 3,500 crore per year for the next five years to be profitable in IPL alone.

According to sources, it has fallen short in the 2019 season of IPL. Though one of the reasons The Walt Disney Company acquired 21st Century Fox was for its international businesses, especially sports, industry experts aren't sure if it would have allowed Star to make such bold bets had it already been in its fold. "Disney is a far more budget-driven company than Star, hence, a lot of its employees are feeling stifled," points out a senior industry observer.

Though on the face of it Star India and Shankar are at the helm as far as the India operations are concerned, a former Star employee claims that not a single decision is being taken without the nod of Burbank.

"It's a weird situation. Disney has even sidelined those employees who had joined the studio business from UTV after Disney wrote off that investment," the industry observer added.

Star India has not been in the pink of health post the merger with Disney. While its expensive sports investments has significantly reduced the company's profitability (its profits as per ROC records dipped from Rs 1,119 crore in the 2017 fiscal to Rs 642 crore in 2018 fiscal and the company is believed to be in deficit in 2019).

Its flagship Hindi entertainment business has not been doing well as the Hindi general entertainment genre has undergone a dip. To add to that, the TRAI ruling which allows consumers to subscribe only to those channels they wish to watch, has put the broadcast industry in disarray.

Viewership of the top five broadcasters is known to have dipped to around 75% from the earlier 90%. "Even advertisers are in two minds to advertise as the reach of the channels has come down significantly in the new tariff regime," points out a senior media planner.

The Walt Disney Company has not had a very successful run in India so far. It had to write off Rs 2,000 crore investment in UTV, and now when it finally has a grip of the Indian market through Star India, the business is going through another rough patch.

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Published on: Jul 25, 2019, 6:35 PM IST
Posted by: Vivek Dubey, Jul 25, 2019, 6:35 PM IST