This story is from December 15, 2017

India is star attraction for Disney in $52 bn Fox deal

The Walt Disney Company, the American multinational mass media and entertainment conglomerate, is all set to acquire 21st Century Fox, the Manhattan-based global mass
India is star attraction for Disney in $52 bn Fox deal
MUMBAI: The Walt Disney Company, the American multinational mass media and entertainment conglomerate, is all set to acquire 21st Century Fox, the Manhattan-based global mass
media corporation headed by Rupert Murdoch, in an allstock transaction valued at US $52.4 billion. While Disney has a market cap of $164 billion, 21st Century Fox is worth over $62 billion, with Star India alone estimated to be worth $14-16 billion.
An official announcement about the deal will be made on Friday (Thursday in the US).
The transaction, post a spinoff of certain 21st Century Fox businesses, will include the latter’s film and TV studios, cable entertainment networks and international TV businesses.
Deal to bring Hotstar, IPL in Disney fold
They also include popular entertainment properties such as XMen, Avatar, The Simpsons, FX Networks and National Geographic. Even as social media platforms were abuzz all week with the ‘media deal of the century’, all eyes are focused on Fox’s extensive India arm—Star India Pvt Ltd—which is being seen as the “sweetener in the deal”. Significantly, the businesses of Fox in India, parked under Star TV, will account for at least one-fourth of the valuation Disney is paying for the game-changing acquisition. The market leader in Indian entertainment and sports assetsis valuedbetween $14billion and $16 billion.

“Back-of-the-envelope calculations based on comparables may value Star Entertainment India’s business itself at $14-15 billion based on $500 million ebitda in the current fiscal,” said Sanjay Jain, director, Taj Capital, a New Delhi-based investment advisory. This does not include Star’s 30% stake in Tata Sky and 51% in Endemol. “And along with it comes Hotstar and IPL cricket rights,” added Jain.
Disney graphic

“It (Star) is actually more than just a sweetener. The number of references that Bob Iger (Disney chairman and CEO) madeon Fox’s India market share is significant,” an industry analyst said.
With entertainment in multiple languages and presence in developed sport as well as emerging sport, Star’s bouquet has become all the more presentable. “The growth delta in emerging sports, for instance, is a lot higher. And then you have the aggression with which Star recently went ahead in acquiring a property like the Indian Premier League (media rights bought at $2.55bn). So, it’s a pretty unique asset. Between sports and entertainment, Star India’s market share alone is over 20%,” the analyst added.
A joint statement released by Disney and Fox said the deal will expand Disney’s direct-to-consumer offerings with Fox’s entertainment content, capabilities in the Americas, Europe (39% ownership of Sky) and Asia.
The deal will see Fox spin off its broadcasting network and stations, Fox News, Fox Business, FS1, FS2 and Big Ten Network toitsshareholders.
Disney will also assume approximately $13.7bn of Fox’s net debt and the acquisition price implies a total equity value of approximately $52.4 billion and a total transaction value of approximately $66.1 billion. Robert Iger, chairman and CEO at The Walt Disney Company, willcontinueuntil 2021, the statement said.
Global giantslike Sony, Verizon and Comcast, which were also said to be in the running for Fox’s assets, quit being in the fray as Disney remained the frontrunner from the beginning until now.
With the entertaining prospect of a clash between Marvel and Fox’s X-Men unfolding, the Disney-Fox deal could prove to be the gamechanger in today’s markets that are dominated by Apple, Amazon, Netflix, Facebook and YouTube.
“The thing with Disney, Comcast and others is that most of the value they created is within America. They have taken their American content and solditoutof theUS. Fox is theonly company that has truly managed a global business (Sky in Europe, Star in India). Even within these two, Sky happens to be a mature player in a mature market while Star happens tobe an exciting business in a fast-growing market. That’s the remarkable thing,” said a person with knowledge of the development.
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