It could perhaps be called the baap of all media deals in India. In fact, one headline said 'an entertainment juggernaut emerges'.
On Wednesday (28 February) night, after months of speculation, Reliance and Disney announced that they had decided to merge their entertainment assets in India and create a $8.5 billion (more than Rs 70,000 crore) media behemoth with more than 100 TV channels, two large streaming services – Disney+Hotstar and JioCinema – and a massive content library.
As the two join hands, we take a closer look at the mega deal and how it will shake up India's media landscape.
About the Reliance-Disney deal
As per the arrangement signed between Mukesh Ambani's Reliance Industries and Walt Disney Company, Reliance's Viacom18 will merge with Disney's Star India. Reliance Industries will own 16.3 per cent of the merged entity, Viacom18 will own 46.8 per cent and Disney 36.8 per cent.
It has also been announced that Reliance will infuse $1.4 billion in the merged entity, and Mukesh Ambani's wife, Nita Ambani, will serve as the chairman of this new entity. Additionally, former Disney India chair Uday Shankar will serve as vice chair and strategic advisor.
"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 (eg, Colors, StarPlus, StarGOLD) and sports (eg Star Sports and Sports18)," the companies said in a joint statement.
The companies further said, "The JV will have over 750 million viewers across India and will also cater to the Indian diaspora across the world."
Additionally, the merged entity will be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets, providing a full suite of entertainment options for the Indian consumer.
The deal is most likely to be completed by the end of this year or the beginning of 2025.
Mukesh Ambani, the chair and MD of Reliance Industries, added, "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."
Once the deal was inked, Bob Iger, CEO of The Walt Disney Company, said: "India is the world's most populous market, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company. 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."
Backdrop to the Reliance- Disney deal
This deal has been in the making for some time now. In fact, talks of such a merger have been circulating since last December when Disney's Bob Iger had said that the company wanted to focus on its core business, and called linear TV non-core.
Disney, which came to India in 1993, has been struggling in recent years. In 2022, Hotstar, which is Disney's streaming channel in India, failed to win the streaming rights for the 2023-2027 seasons of the Indian Premier League cricket tournament. It lost 11.5 million Indian subscribers, a loss big enough for any company to bear.
Moreover, losses were exacerbated in March last year when Warner Bros Discovery moved its content — including shows like Game of Thrones and Succession — to JioCinema.
Implications of Reliance-Disney merger
As experts note, this Reliance-Disney deal — being touted as one of the biggest in the media and entertainment industry — will mark a significant shift in the media landscape of India.
Think about it: through this deal, there will be a whopping 120 channels — Viacom18 has 40, including Comedy Central, Nickelodeon and MTV, along with Disney Star having 80 — across general entertainment, sports, children's TV, documentaries and lifestyle. This is about 49 per cent of the broadcasting market.
When it comes to streaming, the merger will see the combination of Disney+ Hotstar, which currently leads the country's subscription-based video streaming market with 38.3 million subscribers, and JioCinema, a prominent player in the ad-supported video streaming market. As of September last year, JioCinema had about 237 million monthly active users. This means that the new merged entity.
In fact, as per a Reuters report, the merged entity would have a combined library of 200,000 plus hours of content which would include television dramas, movies and sport events.
MorganStanley analysts further noted that this new entity would also have exclusive digital and broadcast rights to some of the key sporting events – including the next four years of IPL, flagship ICC events, domestic Indian cricket, FIFA World Cup , Premier League, and Wimbledon.
Techcrunch quoting Bernstein analysts reported that the combined operations of Disney's Hotstar and JioCinema will have a market leadership within India OTT market with about 85 per cent monthly active OTT user base.
"This merger will have a very big impact on the entire media and entertainment ecosystem," Elara Capital senior vice president Karan Taurani told AFP. "It's going to be a one of its kind." He further said the merger could help put their streaming platforms on a "path towards profitability" in the medium to long term by bringing down content costs.
Geetha Ranganathan, a Bloomberg Intelligence analyst, said to TIME, "The merger can result in meaningful cost savings and improve Disney's bottom line."
As Ken Leon, research director at CFRA Research told CNBC, "The JV will not hurt Disney's earnings, noting that the merger was a win-win for all parties. Cricket is everything in India… I think [CEO> Bob Iger made the right decisions here."
With inputs from agencies
Disclaimer: Firstpost is part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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