After six months of negotiations, Reliance Industries Ltd and The Walt Disney Company have finally announced the signing of binding definitive agreements to form a joint venture that will combine the businesses of Viacom18 and Star India. The merged entity will be the largest media network in the country, with over 750 million viewers across India and a combined revenue of over ₹25,000 crore

As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private Ltd. In addition, RIL has agreed to invest at closing ₹11,500 crore ($1.4 billion) into the JV for its growth strategy.

The transaction values the JV at ₹70,352 crore ($8.5 billion) on a post-money basis. The JV will be controlled by RIL, which will own 16.34 per cent stake directly in addition to 46.82 per cent through Viacom18. The balance of 36.84 per cent will be held by Disney.

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

Double blow

This is in line with Disney’s earlier inclination to deprioritise its interests in India.  After struggling to achieve profitability in its streaming business globally, Disney singled out its streaming service in India in particular. Disney Hotstar ironically lost droves of subscribers after RIL backed Viacom18, wielding a double blow on the service by outbidding Disney for the streaming rights for the Indian Premier League as well as securing a deal with HBO for their coveted content slate. Even before Mukesh Ambani made a concerted bid in the streaming business, Disney Hotstar was struggling with monetising its subscriber base, even though it was the largest streaming service in India. 

“The combination of the media expertise, cutting-edge technology, and diverse content libraries of Viacom18 and Star India will allow the JV to offer more appealing domestic and global entertainment content and sports live streaming services while delivering an innovative and convenient digital entertainment experience at affordable prices,” said a press note.

Nita Ambani will be the Chairperson of the JV, with Uday Shankar as Vice Chairperson, providing strategic guidance to the JV.

The JV will also 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.

‘Landmark agreement’

Mukesh Ambani, Chairman & Managing Director of Reliance Industries, said, “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.”

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.”

Karan Tuarani of Elara Capital told businessline. “This merger will be one of its kind; both companies will wield substantial market share for both linear and digital streaming services. This will lead to a path to profitability for both Disney and Viacom, especially for their streaming businesses, where both companies are making heavy losses.”