Disney Star Faces Potential $2 Bn Downgrade By Reliance Amid Zee-Sony Fallout

In the aftermath of the aborted Sony-Zee merger, Disney Star’s valuation is reportedly likely to take a significant hit, potentially amounting to $2 Bn.

The fallout from Zee Entertainment Enterprises (ZEEL) disputing a $1.5 Bn sub-licensing deal for the International Cricket Council (ICC) has triggered concerns about Reliance’s downgrade of Disney Star, ET reported, citing sources close to the matter.

ZEEL contended that its obligations to honour the ICC deal with Disney Star were contingent on the successful completion of Zee’s merger with Sony. However, Disney Star disputes this claim.

Sources told ET that Reliance Industries (RIL) is closely monitoring the Sony-Zee merger, given the direct implications for Disney Star’s valuations linked to the ICC TV deal.

“Reliance had prepared two scenarios for Disney Star’s valuations – one with ICC TV rights obligations, and the other without them, with a potential $2-Bn downgrade if Disney Star also services the ICC TV deal, besides the digital rights,” the report further said.

In August 2022, Disney Star announced that it has licensed its television broadcasting rights for all ICC men’s and under-19 (U-19) global events for a four-year period from 2024 to 2027 to ZEE Entertainment Enterprises (ZEE).

Last week, the ICC confirmed that Disney Star will cover the ICC U19 Men’s Cricket World Cup 2024 on Star Sports and Disney+ Hotstar. Despite losing the Board of Control for Cricket in India (BCCI) media rights, Disney Star has incorporated the ICC television rights deal in its recently released tariffs, raising the bouquet price by roughly 10%. 

Earlier reports indicated that Reliance and Walt Disney had signed a non-binding term sheet to merge Viacom18 and Disney Star, with ongoing due diligence and valuation exercises. 

If the Reliance-Disney deal materialises, it would create a media giant with approximately INR 25,000 Cr in combined revenues, according to ET’s report.

“Disney Star had bid $3 Bn for ICC media rights based on its understanding with Zee, whereas Viacom18 and Sony had offered bids worth $1.3-1.4 Bn for the property. The losses from the property will be massive since they have overpaid by a huge margin,” the report added.

Meanwhile, Disney’s India business has been struggling with Reliance dominating its presence in the OTT market, particularly by offering free streaming of Indian Premier League cricket (IPL). Disney Hotstar used to hold the right of this broadcast earlier.

Currently, Reliance’s JioCinema app has the rights to broadcast IPL while the Disney Hotstar app owns the rights for International Cricket Council’s (ICC) matches in India until 2027.

Amid significant competition from Reliance, Disney+ Hotstar also stopped streaming HBO content in India last year.

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