Disney and Reliance merge in $8.5 billion deal, forming new India media powerhouse

In a strategic move set to reshape India’s entertainment landscape, Reliance Industries, India’s leading conglomerate, and Walt Disney, the global entertainment giant, have announced the merger of their Indian TV and streaming media assets. The collaboration, unveiled on Wednesday, creates an $8.5 billion entertainment powerhouse, solidifying its dominance in the world’s most populous nation.

As part of the merger agreement, Viacom18’s media operations will be integrated with Star India Private Limited (SIPL) through a court-approved arrangement. Additionally, Reliance Industries (RIL) is set to inject ₹11,500 crore (approximately $1.4 billion) into the joint venture at closing to fuel its growth strategy.

With a post-money valuation of ₹70,352 crore (about $8.5 billion), the joint venture will be primarily controlled by Reliance Industries, holding a 63% stake along with its affiliates, while Disney will own the remainder. Mukesh Ambani, Chairman, and Managing Director of Reliance Industries, hailed the agreement as a landmark moment for the Indian entertainment industry. He emphasized the strategic collaboration’s potential to leverage extensive resources, creative prowess, and market insights to deliver compelling content to audiences nationwide at accessible prices.

“This is a landmark agreement that heralds a new era in the Indian entertainment industry. 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,” Ambani said.

For Disney, the merger marks a significant step in revitalizing its presence in India, following challenges in retaining users in its streaming business and financial pressures stemming from substantial investments in Indian cricket rights. The valuation of Disney’s India business is estimated to be around $3 billion post-merger, significantly lower than its valuation of approximately $15 billion during the Fox acquisition in 2019. However, accounting for synergies, the value is believed to be closer to $4.3 billion.

“The JV will be one of the leading TV and digital streaming platforms for entertainment and sports content in India, bringing together iconic media assets across entertainment (e.g. Colors, StarPlus, StarGOLD) and sports (e.g. Star Sports and Sports18) including access to highly anticipated events across television and digital platforms through JioCinema and Hotstar. The JV will have over 750 million viewers across India and will also cater to the Indian diaspora across the world,” Disney said in a news release.

The combined entity boasts a formidable portfolio, including 120 TV channels, two streaming platforms, and broadcasting rights for cricket tournaments, catering to India’s fervent cricket fan base.

Analysts view the merger as a strategic move that consolidates Reliance’s position in the media landscape and provides Disney with a robust partner with deep financial pockets. The synergies generated by the collaboration are expected to enhance bargaining power in advertising negotiations and provide a financial cushion for both entities.

The deal positions Reliance Industries to surpass competitors such as Sony, Zee Entertainment, and Netflix in India’s $28 billion media and entertainment sector. Nita Ambani, wife of Mukesh Ambani, is slated to chair the board of the combined entity, while former Disney executive Uday Shankar will serve as vice-chair, underscoring the depth of leadership talent driving the venture forward.

Overall, the Reliance-Disney merger represents a transformative alliance poised to redefine India’s entertainment landscape, setting the stage for unparalleled growth and innovation in the years to come.