Reliance, its Viacom18 portfolio and Disney are merging their media businesses in India, creating the largest media entity in the world’s most populous nation. Reliance, which will control the joint venture, directly owns 16.34% of the merged entity, which it has valued at $8.5 billion. Disney will hold a 36.84% stake in the merged entity and Reliance-backed Viacom18, which also counts Paramount Global and James Murdoch’s Bodhi Tree among its backers, will hold a 46.82% stake.
Reliance, which is India’s most valuable company, said it sees an opportunity to expand and streamline its presence in India’s fast-growing market by merging media with Disney India. Reliance, which owns about 75% of Viacom18, plans to invest $1.4 billion in the joint venture for its growth strategy.
For Disney, the deal is bittersweet. The company once valued its India operations at around $16 billion, and its streaming business Hotstar, which became part of Disney India after its takeover of mega Fox, has allowed the US giant to aggressively expand into several Southeast Asian streaming markets.
In addition, Disney disclosed in an SEC filing Wednesday that the joint venture will incur a pre-tax non-cash impairment of between $1.8 billion and $2.4 billion, “approximately half of which reflects an impairment of Star’s net assets India”. in the current quarter.
Expert research shop Moffett Nathanson said it was “increasingly concerned about Disney’s hand in India”. He added: “So while this may signal a retreat for Disney from a challenging market in India, for us – and probably most Disney investors – it is welcome.”
Image: Morgan Stanley
The “strategic” merger of Reliance and Disney India also brings together two leading Indian streamers, JioCinema and Disney+Hotstar. The joint venture also includes access to dozens of Disney-owned television channels and exclusive rights to Disney films and other productions in India, as well as 30,000 additional Disney properties. Between JioCinema and Hotstar, the merged entity will also be the digital hub for content from HBO, Showtime and NBCUniversal.
The combined unit will reach over 750 million viewers across India, the companies said. The new venture comes at a time when major media giants are struggling in India. Sony called off a merger between its India unit and Zee Entertainment last month, ending a two-year takeover consultation that would have created a $10 billion powerhouse in the South Asian market.
Reliance chairman Mukesh Ambani, who also happens to be Asia’s richest man, said the deal with Disney “is a landmark deal that heralds a new era in the Indian entertainment industry.”
He added: “We have always respected Disney as the world’s best media group and we are very excited about the creation of this strategic joint venture that will help us bring together our extensive resources, creative prowess and market knowledge to deliver unparalleled content at affordable prices to a worldwide audience. the nation. We welcome Disney as a key partner of the Reliance group.”
The merger follows a fierce rivalry between Hotstar and JioCinema, which lured top Disney talent last year to bolster its platform. Viacom18 also surpassed Disney’s $3 billion five-year streaming rights to India’s popular cricket tournament, the Indian Premier League, breaking many of Hotstar’s previous viewership records in just one year. Disney paid the same amount for the TV rights. To attract users, both companies have streamed much of their catalogs free of cost in India.
The combined new entity captures both digital and television rights of key cricket sporting events in India such as IPL and ICC matches. IPL 2023-27 radio broadcast is now under JV – Viacom18 has digital streaming rights while Star has TV broadcast rights.
Disney CEO Bob Iger said the joint venture would “create long-term value for the company.” He added: “Reliance has a deep understanding of the Indian market and consumer and together we will create one of the country’s leading media companies, enabling us to better serve consumers with a broad portfolio of digital services and entertainment and sports content.”
The merger also reunites former Star India CEO Uday Shankar and James Murdoch with the business they previously built over a decade. He and Murdoch then launched Bodhi Tree, an investment vehicle in India, backed by $1.7 billion from the Qatar Investment Authority, which invested over $500 million in Viacom18. Shankar now returns as vice chairman of the board of the merged entity.
The merger is subject to regulatory and shareholder approval, and both companies expect to complete by the end of March 2025.
The story has been updated throughout with additional details.
