Walt Disney incurs $2b+ goodwill impairment charge linked to Star India in 2nd quarter
Mumbai: Walt Disney has incurred charges totalling more than $2 billion for goodwill impairments linked to Star India and entertainment linear networks during the second quarter ended March 31.
The US entertainment giant, which has signed a merger deal with Mukesh Ambani's
The US entertainment giant, which has signed a merger deal with Mukesh Ambani's
Reliance Industries Limited ( RIL), has recorded a $1.3 billion non-cash goodwill impairment charge related to the India merger deal, as per a regulatory filing.
According to the Walt Disney regulatory filing, the merger is expected to close in the first half of calendar year 2025, subject to regulatory approvals. Walt Disney or RIL may terminate the merger if the transaction does not get completed by February 28, 2026.
The American entertainment company also stated that it has recognised a $0.7 billion non-cash goodwill impairment charge in the entertainment linear networks segment. It added that Star Sports was a standalone reporting unit that did not have any goodwill, and there was no goodwill impairment at the entertainment direct-to-consumer (DTC) services unit.
According to the Walt Disney regulatory filing, the merger is expected to close in the first half of calendar year 2025, subject to regulatory approvals. Walt Disney or RIL may terminate the merger if the transaction does not get completed by February 28, 2026.
The American entertainment company also stated that it has recognised a $0.7 billion non-cash goodwill impairment charge in the entertainment linear networks segment. It added that Star Sports was a standalone reporting unit that did not have any goodwill, and there was no goodwill impairment at the entertainment direct-to-consumer (DTC) services unit.
As per Walt Disney's financial statement, Star India's assets totaled $4.1 billion, while its liabilities stood at $868 million. It noted that the assets and liabilities are subject to change towards the closure of the merger deal.
The company said the impairment evaluation compares the reporting unit's carrying value to its fair value, which is based on estimated discounted future cash flows.
Future cash flows are based on internal forecasts that consider factors such as projected inflation, economic indicators, and industry growth projections.
On February 28, Walt Disney-owned Star India entered into a definitive binding agreement with RIL and its subsidiary Viacom18 to form a joint venture that will combine the businesses of Viacom18 and Star India.
The transaction will lead to the creation of an $8.5 billion JV which will consist of entertainment and sports pay TV and free-to-air networks, streaming services, library content, and certain production businesses.
Under the transaction, RIL will have an effective 56% controlling interest in the joint venture, followed by Walt Disney with a 37% stake.
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