The valuation of Disney’s Indian business has seen a sharp erosion — as revealed by the terms of its merger with Reliance Industries.

The Reliance-Disney combine has been valued at $8.5 billion, a sign of Disney suffering a massive climbdown from values of $16-17 billion estimated earlier.

The joint venture’s valuation is also less than the combined value of $10 billion attributed to Zee and Sony, combined, before their deal fell apart.

On Wednesday, Reliance Industries announced the merger of Viacom18 and Star India. RIL will own 16.34 per cent in the JV, while the shareholding of Viacom18 and Disney will stand at 46.82 per cent and 36.84 per cent, respectively.

While the buzz of the deal has been on for a few months, the Street believes Reliance has driven a really hard bargain and brought down the valuation of Disney India's media assets.

In October last year, a Bloomberg report said that while RIL values Disney-Star at $3-4 billion, Walt Disney is eyeing a valuation of $10 billion.

According to a Jefferies report, the transaction values the JV at Rs 58,850 crore pre-money. It estimates that Disney’s India business has been valued at Rs 25,900 crore while RIL’s Viacom18 has been valued at Rs 33,000 crore.

Analysts at BofA Securities estimated that the implied value (pre-money) of Viacom18’s asset is $4 billion and Disney India, at $3.1 billion.

A CLSA report said Disney’s Star India reported a sharp fall in its EBITDA to Rs 1,677.8 crore in 2022-23 from Rs 30,086 crore in 2021-22, down 44 per cent. EBITDA stands for earnings before interest, taxes, depreciation and amortisation.

On the benefits of the deal, brokerages pointed out the JV will have higher bargaining power with advertisers, though approval of the CCI is the key.

Analysts do not rule out the possibility of the CCI asking the JV to do away with some channels as it did for Zee-Sony before the collapse of the deal.

“The RIL-Disney partnership can have potentially higher bargaining power with content producers and advertisers owing to its large size,” analysts at Emkay said.