Tata Play is Subscription based Satellite television (DTH) service provider using MPEG-4 digital compression technology, transmitting using INSAT-4A GSAT-10 and GSAT24 satellites.
This transaction has changed the ownership structure of Tata Play, which is India's largest direct-to-home (DTH) firm with 21 million subscribers.
The transaction has valued Tata Play at $1 billion, down from its pre-pandemic valuation target of $3 billion.
With this acquisition, Tata Play will now become a 70:30 joint venture between Tata Sons and Walt Disney. However, it's reported that Tata Sons may also be in talks with Disney to buy out its stake as well. Disney is considering an exit from Tata Play since DTH is a non-core business for the US entertainment firm.
Tata Sons is also reportedly in talks with Disney to buy out its 30% stake. If this happens, Tata Play could become a wholly-owned subsidiary of Tata Sons, which might result in significant changes in operations, content offerings, and business strategies.
This move comes after the proposed initial public offering (IPO) of Tata Play was postponed due to tough market conditions, despite having received approval from SEBI in May 2023. Tata Play, formerly known as Tata Sky, was established in 2001 and has a significant presence across India. Temasek had originally invested in the platform in 2007.
With Tata Sons increasing its stake to 70%, the company will have greater control over Tata Play's strategic decisions. This could lead to a more streamlined decision-making process and potentially a new strategic direction for the company.
Tata Play has intimated the Ministry of Information and Broadcasting (MIB) about the change in shareholding, as required under the DTH rules. This ensures regulatory compliance and continuity of operations without legal hurdles.
The proposed initial public offering (IPO) of Tata Play was postponed due to tough market conditions. The change in ownership might revive discussions about the IPO, which could provide additional capital for Tata Play's expansion and debt reduction.
As Tata Play is a crucial consumer-facing business in the media and entertainment sector for the Tata Group, the increased stake could lead to better operational synergies within the group's companies.
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