With the cancellation of ZEEL and Sony merger, the Disney Star deal with Reliance could potentially take a hit of around $2 billion, owing to a loss of valuation, reported The Economic Times citing sources.

Disney and Reliance are in talks to finalise their merger in February 2024. (Reuters)(REUTERS)

The ET report said that these concerns regarding Disney’s deal with Reliance have been triggered after Zee Entertainment Enterprises Limited (ZEEL) disputed a $1.5-billion sub-licensing deal for the International Cricket Council (ICC).

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ZEEL said in its contract that it will only honour the ICC television deal with Disney Star if its merger with Sony goes through, reported ET. However, Disney has now disputed this claim by ZEEL after the merger was called off.

Sources quoted by ET said that Reliance Industries has been closely following the developments linked to Zee-Sony merger, and its impact on Disney Star’s valuation due 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-billion downgrade if Disney Star also services the ICC TV deal, besides the digital rights,” one of the sources told Economic Times.

Earlier this month, Disney Star and ICC confirmed that the television channel Star Sports and OTT platform Disney+ Hotstar will provide exclusive coverage of the ICC U19 Men’s Cricket World Cup 2024.

Disney has already factored in the ICC deal into its tariffs, raising the bouquet price by around 10 percent since it lost its media rights deal with the Board of Control for Cricket in India (BCCI).

ZEEL-Sony merger falls through

On Monday, Sony Group sent a termination letter to Zee Entertainment, ending the mega-merger worth $10 billion dollars two years after it was announced. The deal failure of the deal further took a hit on ZEEL’s valuation, its share prices falling 33 percent a day after the merger was called off.

The merger was set to create the biggest media entity in the country, with a valuation of over $10 billion. Sony sent the termination letter to Zee on January 22, accusing it of not meeting the merger agreement conditions.

Sony has further demanded $90 million from ZEEL as a break-off fee for the merger, while Zee has dismissed all allegations of violating the merger conditions.

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