Reliance to Merge Viacom18 with Disney's Star in $8.5 Billion Deal
Reliance Industries, an oil-to-telecom conglomerate, and Walt Disney, a global media major, have entered into a definitive agreement to merge their media operations in India. This $8.5-billion deal will result in the creation of a massive entity boasting 120 TV channels and two digital OTT platforms. Viacom18, owned by RIL, is set to merge with Star India, the local arm of Walt Disney, consolidating Reliance's position in India's $28-billion media and entertainment sector. After the merger, Reliance, in partnership with Viacom18, will have a 63% stake in the combined company, with Disney retaining a 37% ownership.
Reliance is set to inject $1.4 billion (Rs 11,500 crore) into the merged entity to support its expansion initiatives, resulting in the valuation of the new company at $8.5 billion (Rs 70,352 crore). This announcement follows the cancellation of a $10-billion merger between Japan's Sony Corp and Zee Entertainment Enterprises. Nita Ambani, spouse of Reliance Chairman Mukesh Ambani, will assume the role of Chairperson on the merged company's board, while Uday Shankar, co-founder of Bodhi Tree Systems, will serve as Vice-Chairperson. Nita's appointment follows her resignation from RIL's board approximately six months ago, as she redirected her focus towards philanthropy.
Shankar's comeback to Disney, where he previously served as the chairman of Star India, is a significant development. Following his departure from Disney, Shankar collaborated with British-American businessman James Murdoch to establish Bodhi Tree. Bodhi Tree, in which Qatar Investment Authority and NBCUniversal & Sky-owner Comcast are also investors, holds approximately 13% ownership in Viacom18. According to a joint statement, Viacom18 will emerge as the largest shareholder of the merged entity, with a 47% stake. Reliance will control the merged entity, as stated in the joint announcement.
The combined entity will reach an audience of over 750 million viewers nationwide, including the Indian diaspora. Disney has faced difficulties in India, including subscriber retention issues and acquiring streaming rights for popular cricket tournaments. In 2022, Reliance outpaced Disney to acquire the streaming rights for IPL and secured a multi-year agreement in April to broadcast HBO shows previously held by Disney. Reliance's decision to stream IPL matches for free led to a significant loss of subscribers for Disney+Hotstar.
Disney may contribute certain additional media assets to the combined entity, the statement said. However, it didn't spell out the details. "Reliance has a deep understanding of the Indian market and consumer", said Disney CEO Bog Iger, and the deal will allow "us to better serve consumers with a broad portfolio of digital services and entertainment and sports".