Reliance Industries and Walt Disney on Wednesday announced a merger of their India media operations, creating a Rs 70,000 crore entertainment giant.
Under the deal, coming just over a month after the failed USD 10 billion merger of rivals Zee and Sony, Reliance and its affiliates will hold 63.16 per cent in the combined entity that will house two streaming services and 120 television channels.
Disney will hold the remaining 36.84 per cent, the companies said in a statement.
Reliance has also agreed to invest at closing Rs 11,500 crore into the joint venture to give it the muscle to fight rivals such as Japan’s Sony and Netflix.
“India is a value-centric market, and consumers like bundling. So, with JioCinema and Disney+Hotstar coming together, they will offer movies, sports and a global catalogue and start charging for it as a premium plan in a bundled offer. That will give them a large scale because they have got Jio’s last mile and their customer base,” said Karan Taurani, SVP at Elara Capital.
“Global streaming services may struggle if JioCinema continues to offer free content. So Netflix and Amazon Prime Video will see a negative impact,” he said.
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.
Reliance separately owns a movie production arm – JioStudios, and majority stakes in two listed cable distribution companies, Den and Hathway.
Utkarsh Sinha, MD, Bexley Advisors, a boutique investment bank firm, told Moneycontrol that the current consolidation in India’s media landscape presents a potent opportunity since the consumer wallet is stretched thin among multiple options.
“A strong, consolidatory wave is coming down the pipeline that should be active for the next 2-3 years…The consolidation would mean that the emergent survivors are able to command a larger individual share of the currently dispersed media and entertainment wallet,” he said.
Top Things To Know About The Landmark Deal
- The merged entity will have 120 TV channels and two streaming platforms, making its business much larger than rivals such as Japan’s Sony, Netflix and Zee Entertainment in the country’s $28 billion media and entertainment sector.
- Together, Reliance and Disney will have over 750 million viewers across India and will also cater to the Indian diaspora across the world.
- Nita Ambani, wife of billionaire and Reliance chairman Mukesh Ambani, will head the joint venture.
- Uday Shankar will be the vice chairperson, who is a former top Disney executive and has a joint venture with James Murdoch, called Bodhi Tree.
- The JV will bring 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 joint venture will also be granted exclusive rights to distribute Disney films and productions in India, with a licence to more than 30,000 Disney content assets, providing a full suite of entertainment options for the Indian consumer.
- Viacom18, majority-owned by Reliance, has 40 television channels, including Comedy Central, Nickelodeon and MTV.
- Disney Star, a household name in India, has about 80 channels and the brand is known for Hindi family dramas as well as Hollywood movies.
- Both companies’ channels span general entertainment, sports, children’s TV, documentaries and lifestyle programmes. They also cover several regional language programming.
- Viacom18 has the TV rights for domestic and international cricket matches run by the Board of Control for Cricket in India. Disney has TV rights for the popular Indian Premier League (IPL) until 2027.
STREAMING
- Reliance’s JioCinema and Disney’s Hotstar would have a combined library of 200,000 plus hours of content that includes television dramas, movies and sport events.
- Disney’s Hotstar was the second-most downloaded video streaming app in India in 2022 after MX Player, according to a report by the Federation of Indian Chambers of Commerce and Industry and EY.
- Disney’s streaming content includes global blockbusters, movies from the Marvel universe as well as National Geographic documentaries. It streamed seven out of the top 15 most-watched original shows in India in 2022, according to a report by media consulting firm Ormax.
- Disney has the digital rights for International Cricket Council’s matches in India until 2027, while Ambani’s JioCinema now has the streaming rights for IPL until 2027 after outbidding Disney.
- JioCinema last year struck deals with The Pokemon Company to stream content and signed a deal with Warner Bros to bring more Hollywood and international content on its platform.
- The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of 2024 or the first quarter of 2025.
- The Disney Reliance media merger deal contrasts the failed plans of rivals Sony and Zee last month. This merger which could have created a USD 10.5 billion entity, was called off by Sony Group and both sides are mired in litigations and arbitrations.
(With agency inputs)
Disclosure: News18.com is part of Network18 Media & Investment Limited which is owned by Reliance Industries Limited.
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