Disney will sell 60 percent stake in Disney-Star to Viacom18. The value of the India business is $3.9 billion according to The Wall Street Journal.
The deal is expected to close this month said the publication. In December Bloomberg had said that the two parties were working on merger through a combination of cash and stock.
Last year reports had indicated that Disney was looking to sell its India division due to the poor performance of Disney+ Hotstar after the digital rights for the IPL went to JioCinema. This resulted in a loss of subscribers. Disney+Hotstar also did not renew the rights for HBO content which also went to JioCinema.
This move by Disney-Star and Viacom18 to come together is even more significant given the failure of Sony and Zeel to merge. The coming together of Disney-Star and Viacom18 will create a powerhouse. There will be more power to negotiate with advertisers and distributors with tentpole properties like the IPL. One issue to be resolved is what happens with the ICC rights. Media reports have suggested that the valuation of Disney-Star has been hit after Zeel backed out of the ICC TV rights deal. That means an economic loss on the property that could be in the region of $1.5 billion according to reports. The expectation is that Disney-Star will sue Zeel over the ICC TV rights.
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