What we thought of Star India valuation was all wrong. Well, mostly

livemint.com:

MUMBAI : Eyebrows were raised when The Walt Disney Co. agreed to merge its India unit with Reliance Industries Ltd entities at a valuation of $3.12 billion, since the business was seen to be worth much more when Disney acquired it nearly seven years earlier. However, documents accessed by Mint reveal a different picture.

On 28 February, Reliance, its step-down subsidiary Viacom18 Media and Disney agreed to combine the businesses of Viacom18 and Star India, valuing them at $3.9 billion and $3.12 billion respectively. Multiple media reports and pundits pointed out that Disney had taken a steep haircut, as Star India, when Disney bought it from Rupert Murdoch in 2019 as part of a $71 billion global deal for 21st Century Fox, was valued much higher — at $12-15 billion. However, the deal with Murdoch in December 2017 had valued Hotstar at just $6 billion, the documents showed, while Murdoch's 30% stake in Tata Play (then Tata Sky) was valued at another $800 million.

By the time the deal concluded in 2019, the Indian rupee had weakened and the value ascribed to Star India fell to $5 billion, while that of Tata Play was at $600 million. In the Reliance-Disney JV, Star India is valued at $3.12 billion, while Tata Play’s equity is capped at $300 million. Disney is expecting $500 million in licence fees from the JV over the next five years and has ascribed the value of the stake at $3.9 billion.

Factoring in the weaker rupee, Disney’s India assets’ value would be just around $4.5 billion today, on a status quo basis, the documents show. A Disney Star spokesperson declined to comment on Mint’s detailed query on the valuation details. The documents, sourced from investment bankers and legal firms show that Disney did settle for a