Jio Star India's provisions for onerous sports contracts rise to ₹25,760 crore in FY25
, jointly owned by
Reliance Industries Limited
(RIL) and
Walt Disney
, has reported more than double the provisions for expected losses on onerous contracts related to sports events for 2024-25, surging to Rs 25,760 crore from Rs 12,319 crore in the previous financial year.
The sharp increase, disclosed in the company's audited standalone financials for 2024-25, reflects mounting pressure from long-term content and sports rights deals that are projected to generate lower revenues than their associated execution costs.
Star India holds the media rights for major cricket properties, including the Indian Premier League, International Cricket Council (ICC) events and matches of the Board of Control for Cricket in India.
During the fiscal, the company set aside an additional Rs 22,129 crore in provisions while utilising Rs 8,688 crore.
'The company has estimated that the contracts related to certain sports events are onerous, as the expected revenue from customers related to these events is likely to be less than the cost involved. Hence, the company has created the onerous provision to the extent of estimated loss from future events,' Jio Star India stated in its annual filings. 'These judgements and estimates may change in future periods due to the uncertainty involved with such estimates.'
Sanjog Gupta
, CEO of sports at Jio Star India, recently left the company to become the chief executive of the International Cricket Council. Ishan Chatterjee has succeeded him as CEO of sports.
In 2023-24, Star India had incurred a standalone net loss of Rs 12,548 crore. In a regulatory filing, the broadcaster attributed the weak financial performance to a Rs 12,319 crore provision for an 'onerous contract' related to the
ICC media rights deal
.
Star India had acquired the ICC television and digital rights for a hefty $3 billion for a four-year period ending in 2027. It later sub-licensed the TV rights to
Zee Entertainment
, which ultimately withdrew from the agreement following the collapse of its proposed merger with Sony Group Corp's India units in January 2024.
Jio Star
initiated arbitration proceedings against Zee Entertainment before the London Court of International Arbitration on March 14, 2024. It has since increased its damages claim to more than $1 billion in the ongoing dispute over the now-terminated ICC broadcast rights agreement.
Despite the increase in liabilities, the company reported a modest standalone profit of Rs 18 crore for 2024-25, recovering from a loss of Rs 12,548 crore in the previous fiscal.
Revenue from operations edged up to Rs 21,044 crore from Rs 20,097 crore, driven by growth in advertising, subscription and syndication revenues, which together increased to Rs 20,233 crore from Rs 19,605 crore.
Total expenses remained high at Rs 21,781 crore in 2024-25, although down from Rs 32,944 crore in the previous fiscal. Operating expenses alone amounted to Rs 17,826 crore. Total income went up to Rs 21,686 crore from Rs 20,354 crore during this period.
The company's total assets swelled to Rs 93,178 crore from Rs 25,129 crore. Equity capital rose to Rs 1,594 crore from Rs 494 crore, while other equity increased sharply to Rs 51,465 crore from Rs 5,383 crore. The company was supported by a Rs 15,348 crore equity infusion during the year. RIL invested Rs 11,500 crore in Jio Star as part of the merger deal with Disney.
On April 25, Crisil assigned 'CRISIL AAA/Stable/CRISIL A1+' ratings to Jio Star India's total bank loan facilities worth Rs 33,000 crore.
In a note, Crisil said the ratings reflect the company's strong market position in television and digital streaming. It also highlighted Jio Star's comprehensive content offerings in entertainment and sports, particularly cricket broadcasting and streaming. Further, it said, the company's financial risk profile is supported by a healthy capital structure and strong liquidity.
The note added that the ratings centrally factor in the strong parentage of RIL, along with its financial, operational and managerial control over Jio Star, given the company's strategic importance. RIL is expected to provide financial support, if required.
However, these strengths are partially offset by ongoing investments in committed sports rights fees, which have a long gestation period and are susceptible to volatility in advertising revenue. As a result, a turnaround in profitability will remain monitorable over the medium term, Crisil said.
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