On Tuesday, Reliance Industries announced its inability to comment on reports regarding the proposed merger between Walt Disney Co.’s India unit and Mukesh Ambani’s media business. Disney initially aimed for $10 billion, but its India assets have now fallen to $4.5 billion in value. The decrease in Disney India unit valuation is attributed, in part, to a revenue write-off stemming from the sale of cricket TV rights to Zee Entertainment Enterprises.
Reliance on Media Speculation on Disney India Unit Valuation
In a stock exchange filing, the company stated,
“We are unable to comment on media speculation, and it would be inappropriate on our part to do so.”
Bloomberg previously reported that Disney’s India assets are currently valued at around $4.5 billion, a notable decrease from the $10 billion targeted by the US entertainment giant.
The dip in Disney India unit valuation is partly attributed to a write-off of revenue resulting from Disney’s sale of cricket TV rights to embattled Zee Entertainment Enterprises Ltd.
Reliance Considers Up to $2 Billion Downgrade of Disney Star Amidst Valuation Challenges
ET’s earlier report highlighted the potential impact of the aborted Sony-Zee merger on Disney Star’s valuation. Zee Entertainment Enterprises, disputing its obligations to honour a $1.5-billion sub-licensing deal for the International Cricket Council (ICC), has heightened the probability of Reliance downgrading Disney Star by up to $2 billion. Individuals privy to the development informed ET that the anticipated losses are tied to challenges arising from the media rights agreement.
Ambani’s Bid for Disney-Reliance Media Deal
Ambani aims to forge a media giant, valued at around $ ON APP billion, through a merger with Disney, where Reliance would hold a 51% stake, and Disney would secure about a 40% stake, with the remaining held by James Murdoch’s Lupa Systems LLC. The two companies plan to finalize a binding deal in February, as reported by ET. The collapse of the $10 billion Zee Entertainment-Sony Group Corp. mega-merger has paved the way for Reliance to emerge as the leading media entity in India, with Disney’s support. Disney’s motivation for the merger stems from challenges in retaining subscribers amid rising competition from local rivals. In 2022, Reliance surpassed Disney by acquiring streaming rights to the Indian Premier League for $2.7 billion, allowing free broadcasts of the popular cricket tournament.
Responding to the competition, Disney adopted a similar strategy, streaming Cricket World Cup matches for free in 2023, resulting in record viewership.
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