Disney and Reliance agree Indian asset merger

May 2024 | DEALFRONT | MERGERS AND ACQUISITIONS

Financier Worldwide Magazine

May 2024 Issue

Following a great deal of speculation, in late February Reliance Industries and the Walt Disney Company announced the merger of their India TV and streaming media assets, creating an $8.5bn entertainment group.

Under the terms of the deal, Disney will combine its Star India service with Viacom18, which is backed by Mukesh Ambani’s Reliance Industries. According to a statement announcing the deal, Disney will control 36.84 percent of the new group, while Ambani-led Reliance Industries Ltd will own 16.34 percent in the joint venture. Viacom18 will control the remaining 46.82 percent.

The deal is expected to close in the last quarter of 2024 or the first quarter of 2025, subject to regulatory, shareholder and other customary approvals. The joint venture will be granted exclusive rights to distribute Disney films and productions in India, with a licence to more than 30,000 Disney content assets. The deal will also help Reliance – a relative newcomer to the Indian media sector – bolster its streaming platform, Jio Cinema, by accessing Disney-Star India’s content library as well as drawing on its sport broadcasting experience. Together, the Reliance-Disney merged entity will have 120 TV channels and two streaming platforms, plus TV and streaming cricket rights for key tournaments, an area of significant focus for media rights in India. The combined company will service around 750 million customers across the country.

According to Reliance, Nita Ambani will serve as chairperson of the joint venture and Uday Shankar will be vice chairperson.

“This is a landmark agreement that heralds a new era in the Indian entertainment industry,” said Mukesh D Ambani, chairman and managing director of Reliance Industries. “We have always respected Disney as the best media group globally and are very excited at forming this strategic joint venture that will help us pool our extensive resources, creative prowess, and market insights to deliver unparalleled content at affordable prices to audiences across the nation. We welcome Disney as a key partner of Reliance group.”

“India is the world’s most populous market, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company,” said Bob Iger, chief executive of the Walt Disney Company. “Reliance has a deep understanding of the Indian market and consumer, and together we will create one of the country’s leading media companies, allowing us to better serve consumers with a broad portfolio of digital services and entertainment and sports content.”

“We are privileged to be enhancing our relationship with Reliance to now also include Disney, a global leader in media & entertainment,” said Mr Shankar, co-founder of Bodhi Tree Systems, a key investor in Viacom18. “All of us are committed to delivering exceptional value to our audiences, advertisers and partners.”

The deal marks a key milestone in Disney’s streaming ventures in India. It has struggled to stem the steady tide of users leaving its Indian streaming business and has had to contend with the financial strain caused by billions of dollars in Indian cricket rights payments.

The merger values the India business of Disney at around $3bn, far lower than the roughly $15bn valuation when Disney acquired it as part of its $71bn Fox deal in 2019. Disney began exploring options to sell or find a joint venture partner for its India digital and TV business in July after data from CLSA estimated that Disney+ Hotstar’s subscriber base shrank by nearly 5 million users in India after it lost the digital rights for the Indian Premier League to Reliance in 2022.

Richard Summerfield