Disney: India Exit a Wise Move; Our $115 Fair Value Estimate Unchanged

Walt Disney intends to spin Star India into a joint venture that will include Viacom 18, a local competitor. Disney’s contribution to the JV, in which it will have a 37% stake, will consist of the Star India assets and some Disney content rights and licenses, for which we expect Disney will earn licensing revenue. While Disney will receive no immediate cash compensation as it would have for selling the operations outright, we think the most important aspect is that it is exiting India and should be better able to focus attention and resources on its core businesses. The Indian operations contributed minimally to our forecast, and we are maintaining our $115 fair value estimate and wide moat rating.