New Delhi: Reliance Industries Limited (REL), India’s largest private sector company, has entered into a non-binding agreement with Walt Disney Company, one of the world’s leading entertainment conglomerates, to merge their Indian media and entertainment businesses. The deal, which was signed in London last week, is expected to be worth about $10 billion and create a media giant with over 100 TV channels and two OTT platforms. The deal will be 51 percent cash payment and 49 percent share transfer.
According to media reports, the due diligence and evaluation process for the deal will start soon and is likely to be completed by February 2024. However, Reliance Industries is keen to wrap up the deal by January end. Neither Reliance Industries nor Walt Disney have officially commented on the deal. A Walt Disney spokesperson declined to comment when contacted by the media.
The deal, if finalized as per the agreement, will be the biggest merger in India’s media and entertainment sector, which is estimated to be worth around $34 billion. The merged entity will have a dominant position in the Indian market, with a wide range of content in multiple languages and genres, catering to various segments of audiences. The merged entity will also have a strong digital presence, with two of the leading OTT platforms in India, Disney Plus Hotstar and JioCinema.
The deal will also bring together two of the most influential media houses in India, Disney-Star India and Viacom 18. Disney-Star India is a subsidiary of Walt Disney Company, which acquired the entertainment division of 21st Century Fox in 2019. Disney-Star India operates Star India, which has a vast network of 70 TV channels in eight languages, including sports, news, movies, regional, and general entertainment. Disney-Star India also owns the OTT platform Disney Plus Hotstar, which has over 300 million monthly active users and offers live sports, originals, Hollywood, Bollywood, and regional content.
Viacom 18 is a joint venture between Reliance Industries and ViacomCBS, a US-based media company. Viacom 18 operates 28 TV channels in seven languages, including news, movies, kids, music, and general entertainment. Viacom 18 also owns the OTT platform JioCinema, which has over 100 million subscribers and offers exclusive content from Reliance Jio and ViacomCBS. JioCinema also has the rights to broadcast India’s domestic cricket matches for the next five years.
The merger of Disney-Star India and Viacom 18 will help Reliance Industries expand its media business, which is part of its digital and consumer strategy. Reliance Industries, which also owns Reliance Jio, India’s largest telecom operator with over 400 million subscribers, aims to leverage its network and data capabilities to offer a diverse and integrated portfolio of digital services and content to its customers. Reliance Industries has also recently consolidated its television and digital news businesses under its units Network18 Media and Investments Limited and TV18 Broadcast.
The merger will also help Walt Disney to exit its Indian business, which has been underperforming in the last few years. Walt Disney’s Chief Executive Officer Bob Iger had hinted at selling some of its businesses in July 2023, citing challenging circumstances. According to the latest report of Star India, its consolidated net profit has declined by 31 percent to Rs 1,272 crore in the financial year 2022-23. During the same period, its income increased by nine percent to Rs 20,699 crore. The loss of Novi Digital Entertainment, the firm that owns the Disney Plus Hotstar platform, also increased to Rs 748 crore, while its income increased by 35 percent to Rs 4,331 crore.
The merger will also have a significant impact on the competitive landscape of the Indian media and entertainment sector, which is witnessing rapid growth and transformation due to the rise of digital platforms and changing consumer preferences. The merged entity will compete with other leading media groups like Zee Entertainment and Sony Pictures, which are also in the process of finalizing a merger agreement. The merged entity will also face competition from other OTT platforms like Netflix and Amazon Prime, which have been investing heavily in original and local content to attract and retain Indian viewers.