Following the unsuccessful Sony-Zee merger, Disney Star faces the looming threat of a substantial devaluation, potentially reaching an unprecedented $2 billion, according to The Economic Times’ sources. The fallout stems from Zee Entertainment Enterprises (ZEEL) disputing a $1.5-billion sub-licensing deal for the International Cricket Council (ICC), raising concerns about Reliance’s potential impact on Disney Star’s valuation downgrade.
ZEEL argues that its commitment to fulfill the ICC deal with Disney Star hinges on the successful completion of Zee’s merger with Sony, a claim contested by Disney Star. The ongoing Sony-Zee merger is under close scrutiny by Reliance Industries (RIL), as it directly influences Disney Star’s valuation, particularly concerning the ICC TV deal.
RIL has reportedly devised two valuation scenarios for Disney Star, one incorporating obligations related to ICC TV rights and the other excluding them. The looming downgrade of up to $2 billion hinges on Disney Star fulfilling its ICC TV deal alongside digital rights.
Despite the uncertainties, Disney Star has affirmed its coverage of the ICC U19 Men’s Cricket World Cup 2024 on Star Sports and Disney+ Hotstar. Notably, the company has factored the ICC television rights deal into its pricing structure, increasing the bouquet price by approximately 10 percent, despite losing the Board of Control for Cricket in India (BCCI) media rights. Both Disney Star and Reliance have chosen not to comment on the ongoing situation.
Additional reports suggest that Reliance and Walt Disney have entered a non-binding term sheet to merge Viacom18 and Disney Star, with due diligence and valuation processes currently underway. If this collaboration materializes, it is expected to create a media powerhouse with combined revenues of around ₹25,000 crore.
In a notable market development, Zee’s stock witnessed a sharp 33 percent decline on the BSE following Sony Corp’s decision to call off the proposed merger with Zee. Industry insiders speculate that Disney Star could incur losses exceeding $1.5 billion from the ICC deal, given the substantial gap between winning bids and rival offers.