Star India’s valuation has witnessed a significant decline from five years ago, according to the terms of the joint venture transaction between Reliance Industries Ltd (RIL) and Walt Disney Co. announced on February 28. The deal combines Star India with RIL’s Viacom18 unit, with RIL and Viacom18 controlling the venture.
Star India, which boasted a valuation of $15 billion in 2018 (at the time of Disney’s acquisition of 21st Century Fox), saw a considerable reduction to $3.2 billion now. Analysts attributed the decline in Star India’s valuation to RIL’s formidable negotiating skills.
“While the exact details of the negotiation process remain undisclosed, it is evident that RIL has leveraged its position to drive down the valuation of Star India,” an analyst said on condition of anonymity. “This reduction in valuation could potentially reflect RIL’s keen focus on securing a favourable deal structure that aligns with its long-term objectives in the media sector.”
The composition of the board, comprising five RIL nominees, three Disney representatives, and two independent directors, underscores RIL’s commanding position in the venture. Industry analysts suggest that this strategic arrangement consolidates RIL’s control over the merged entity, enabling it to drive the company’s future direction and growth trajectory.
Despite the decline in Star India’s valuation, industry experts remain optimistic about the potential synergies and growth opportunities presented by the merger. The combined strengths of Viacom18 and Star India are expected to create a formidable force in India’s media landscape, offering consumers a diverse array of entertainment and sports content.
“This is an extremely positive development. Consolidation is happening in the industry. The merged entity will have a significant share of the advertisement business. The majority of sporting events will be under the merged entity, and sports has an EBITDA of 40-50%, so that will be a big boost. The enterprise value of the deal that is being talked about, when all of it is finally combined with Network18 and TV18, will probably mean that the market value of the business will go up going ahead,” said Deven Choksey, Managing Director of KR Choksey Shares and Securities.
The successful execution of the deal is poised to redefine the future of entertainment for millions of viewers across the nation.
Reliance Industries and Star India have yet to comment on the specifics of the negotiation process and the decline in Star India’s valuation. In a regulatory filing, Walt Disney said on Wednesday that the merger of Star India with Reliance Industries Ltd’s Viacom18 will contribute to half of its non-cash pre-tax impairment charges estimated to be between $1.8 billion to $2.4 billion in the current quarter.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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