Walt Disney CEO Bob Iger said the merger would create a big entity and help it to stay in the market at a “significant level”. File
| Photo Credit: AP

Walt Disney CEO Bob Iger has said a joint venture with Reliance Industries after merging its India business would benefit the company in terms of profit and also “derisk” its business in the Indian market.

The merger deal will create a big entity and help it to stay in the market at a “significant level”, said Iger at a Morgan Stanley investor conference earlier this week.

“We had an opportunity to align with Reliance, which is obviously the company that has done very well there and one that we respect. And in doing so, end up owning part of a bigger media company. And we believe that, that not only should benefit us in terms of the bottom-line, but derisk us as well there,” he said.

Last month, Walt Disney Co. and Reliance Industries announced the signing of binding pacts to merge their media operations in India.

Under the deal, Reliance and its affiliates will hold 63.16% and Disney will have 36.84% in the JV, which will create India’s leading media company that will house two streaming services and around 120 television channels.

“We wanted to stay in India. We made a big investment in India when we purchased the assets of 21st Century Fox. We are one of the biggest media companies in India. But even though it is the most populous country in the world, we felt we want to be there because of that, we also know that there are challenges in that market,” he said.

Mr. Iger said, the merger will create a big entity and help it to stay in the market at a “significant level”.

“So, it’s kind of the best of both worlds. We stay in the market at a significant level. We have a very good partner in Reliance, and we get to have a chance of growing a business and lowering the risk of doing so,” he added.

The transaction values the joint venture at ₹70,352 crore ($8.5 billion) on a post-money basis, excluding synergies.

Billionaire Mukesh Ambani-led Reliance has also agreed to invest at closing ₹11,500 crore into the joint venture to give it the muscle to fight rivals such as Japan’s Sony, and Netflix.

Its OTT platform Disney + Hotstar has seen its paid subscriber base decline from around 55 million to 40 million in the first quarter of FY24 because of Reliance’s Jio Cinema winning exclusive rights for live sports. The combined entity will have the largest OTT subscriber base.

Disney + Hotstar was launched in India in 2020, post the acquisition of the entertainment assets of 21st Century Fox at a valuation of $71.3 billion, thereby taking over the operations of Star India and Hotstar. It housed entertainment and cinema channels such as StarPlus and StarGold as well as sports channels like Star Sports.

While Disney + Hotstar rapidly increased its subscriber base initially with the streaming rights of cricket matches (IPL, World Cup), it lost the bid for the digital streaming rights in the 2023-27 cycle, which was won by Reliance-backed Viacom18 for $720 billion, 12.92% higher than what Star India had paid on an average per match value.

Media ventures of Reliance are currently housed in Network 18, which owns TV18 news channels as well as a plethora of entertainment (under the ‘Colors’ brand) and sports channels. NW18 also has stakes in moneycontrol.com, bookmyshow and publishes magazines.

NW18 owns news channels CNBC/CNNNews.

Reliance separately owns a movie production arm — JioStudios, and majority stakes in two listed cable distribution companies, Den and Hathway.

Disney and Reliance logos are seen in this file illustration.
| Photo Credit: Reuters

Reliance Industries Ltd. (RIL), Viacom 18 Media Private Ltd. (which is majority-owned by RIL’s entity TV18 Broadcast), and The Walt Disney Company (Disney) have signed binding definitive agreements to form a joint venture (JV) which will combine the businesses of Viacom18 and Star India in India.

Towards this Viacom18 will be merged into Star India Private Ltd. through a court-approved scheme of arrangement. Besides this RIL will invest at closing ₹11,500 crore into the JV for its growth strategy.

“The transaction values the JV at ₹70,352 crore on a post-money basis, excluding synergies. After completion of the above steps, the JV will be controlled by RIL and owned 16.34% by RIL, 46.82% by Viacom18 and 36.84% by Disney,” the entities said in a joint statement.

Subject to regulatory and third-party approvals, Disney may also contribute certain additional media assets to the JV.

Nita Mukesh Ambani will be the chairperson of the JV and Uday Shankar, the former President of Walt Disney Asia Pacific, will be Vice Chairperson providing strategic guidance to the JV.

The transaction is expected to be completed in the last quarter of calendar year 2024 or first quarter of calendar year 2025.

The JV will be one of the leading TV and digital streaming platforms for entertainment and sports content in India, bringing together media assets across entertainment (Colors, StarPlus, StarGOLD) and sports (Star Sports and Sports18) including access to highly anticipated events across television and digital platforms through JioCinema and Hotstar, the companies said.

The JV will have over 750 million viewers across India and will also cater to the Indian diaspora across the world, they said.

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

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.”

Uday Shankar, Co-founder, Bodhi Tree Systems, said, “We are privileged to be enhancing our relationship with Reliance to now also include Disney, a global leader in media & entertainment.”