On Wednesday, Walt Disney Co. and Reliance Industries announced the signing of legally binding agreements to combine their media businesses in India into a massive new company valued at Rs 70,000 crore.
The combined company, which will include two streaming services and 120 television channels, will be owned by Reliance and its affiliates to the tune of 63.16 percent. Disney will own the remaining 36.84 percent of the business, according to a statement from the firms.
In order to give the joint venture the strength to take on competitors like Netflix and Sony of Japan, Reliance has also committed to invest a total of close to Rs 11,500 crore in it.
Due to Reliance’s Jio Cinemas obtaining exclusive rights for live sports, Disney+Hotstar saw a decrease in its paid subscriber base in the first quarter of current fiscal year, from approximately 55 million to about 40 million.
With nearly 120 channels, the merged company will have the biggest OTT subscriber base in the nation.
Reliance’s media operations are currently managed by Network 18, which also owns a number of sports and entertainment channels under the ‘Colors’ brand, in addition to TV18 news stations.
In addition, NW18 publishes periodicals and has investments in bookmyshow and moneycontrol.com. It also owns CNN and CNBC, two news networks. JioStudios is a movie production company owned independently by Reliance. It also holds controlling shares in Den and Hathway, two publicly traded cable distribution firms.
Following 21st Century Fox’s acquisition of its entertainment assets at a USD 71.3 billion valuation, which resulted in the takeover of Star India and Hotstar, Disney+Hotstar was introduced in India in 2020. Along with sports networks like Star Sports, it hosted entertainment and movie channels like StarPlus and StarGold.
Disney+Hotstar lost the bid for the digital streaming rights for the 2023–27 cycle, which was won by Reliance-backed Viacom18 for USD 720 billion, 12.92 percent higher than what Star India had paid on average per match value. This is despite the fact that Disney+Hotstar initially rapidly increased their subscriber base with the streaming rights of cricket matches (IPL, World Cup).
The joint venture will be led by Nita Ambani, the rich wife of Reliance chairman Mukesh Ambani, with Uday Shankar serving as vice chairman.
Shankar, a former senior Disney executive, and James Murdoch co-own Bodhi Tree, a joint venture.
“Reliance Industries Ltd (and its affiliate) Viacom 18 Media Pvt Ltd and The Walt Disney Company today announced the signing of binding definitive agreements to form a joint venture that will combine the businesses of Viacom18 and Star India,” stated a statement.
“As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private Limited (SIPL) through a court-approved scheme of arrangement,” it stated.
After deducting synergies, the joint venture is valued at Rs 70,352 crore (USD 8.5 billion) according to the transaction.
“Disney may also contribute certain additional media assets to the joint venture, subject to regulatory and third-party approvals,” it stated without further detail.
The joint venture will combine iconic media assets from the entertainment and sports industries, such as Colors, StarPlus, StarGOLD, and Star Sports and Sports18, to become one of India’s top TV and digital streaming platforms for entertainment and sports content. It will also provide access to highly anticipated events on television and digital platforms, such as JioCinema and Hotstar.
The joint venture would serve the global Indian diaspora as well as more than 750 million viewers in India.
“The joint venture will be able to offer more appealing domestic and global entertainment content as well as sports live streaming services, while delivering an innovative and convenient digital entertainment experience at affordable prices, thanks to the combination of the media expertise, cutting-edge technology, and diverse content libraries of Viacom18 and Star India.”
“With the addition of Disney’s acclaimed films and shows to Viacom18’s renowned productions and sports offerings, the joint venture will offer a compelling, accessible and novel digital-focused entertainment experience to people in India and the Indian diaspora globally,” stated the statement.
With a license to over 30,000 Disney intellectual assets, the joint venture will also be given the unique right to distribute Disney productions and movies in India, offering the Indian consumer a wide range of entertainment choices.
Reliance Industries Chairman and Managing Director Mukesh D. Ambani discussed the merger, stating that it is a historic deal that marks the beginning of a new chapter in the history of the Indian entertainment sector.
“Disney has traditionally been regarded as the greatest media company in the world, and we are thrilled to have formed this strategic partnership to combine our vast resources, artistic talent, and commercial knowledge to provide audiences all over the country with unmatched programming at competitive costs. Disney is a valuable partner of Reliance Group, which we appreciate,” he stated.
“India is the most populous market in the world, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company,” stated Bob Iger, CEO of The Walt Disney firm.
“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,” he stated.
Co-founder of Bodhi Tree Systems Uday Shankar believes that this partnership will have a significant impact on how entertainment is provided in India going forward.
The deal is anticipated to close in the last quarter of 2024 or the first quarter of 2025, pending regulatory, shareholder, and other customary clearances.
