Disney India may sell 10% stake in Rs 3,200-crore Tata Play IPO: Report

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New Delhi: Disney India is expected to sell its 10 per cent stake in direct-to-home (DTH) player Tata Play, which is considering going for an initial public offering (IPO) to raise Rs 3,200 crore. Tata Play is likely to file the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) by the end of this month.

Citing unnamed sources, Business Standard reported that Disney has about 30 per cent stake in Tata Play, which is India’s largest DTH operator. Plus, India is the only market where Disney has an investment in a distribution platform, and it got the stake after the acquisition of Rupert Murdoch’s 21 Century Fox in 2019.

Disney holds 20 per cent direct and 9.8 per cent indirect stake in Tata Play. Experts are of the view that the company likely to offload approximately 10 per cent stake in Tata Play to comply with cross-holding rules in the media. Although 100 per cent foreign direct investment (FDI) is allowed in DTH, there is a 20 per cent equity limit for broadcasters investing in DTH companies.

Among other investors in Tata Play is private equity firm Temasek, which has made investments via its subsidiary Mauritius-based Baytree Investments. Baytree owns a 10 per cent stake in the company. The Tata group, which holds 60 per cent stake in Tata Play, has reduced its stake by 20 per cent over the years, and the major shareholders of the Tata group include Tata Sons and Tata Capital.

According to the business daily, a Tata Play spokesperson said the company had no comment to offer on the matter.

However, the private DTH market has faced headwinds in recent years with the rise in video streaming services, which have made it easy for viewers to consume media and entertainment content anytime and anywhere. Experts say due to the strong promotion of DD FreeDish by Prasar Bharati in the last five years, the challenges for private DTH companies have increased.

Shashi Shekhar Vempati, former chief executive officer of Prasar Bharati, told the publication: “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.”

He went on add that individual members use video streaming apps for more personal entertainment needs, and these have hugely impacted the upper segment of the DTH market, which is witnessing a churn in terms of subscribers.

Between 2017 and 2022, DD FreeDish’s subscribers grew from 2.2 crore to 4.3 crore, and the numbers continue to grow as channels line up to associate with it, as per a recent Prasar Bharati report.

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