Reliance Industries Limited’s Viacom18 has inked a binding agreement with the Walt Disney Company to merge their media operations in India and form a joint venture that will see the businesses of Viacom18 and Star India being combined.
As a part of its growth strategy, Reliance Industries will invest Rs 11,500 crore. The transaction values the joint venture at Rs 70, 352 crore on a post money basis.
After the above mentioned steps have been completed, 16.34 percent of the joint venture will be owned by Reliance and 46.82 percent by Viacom18 and 36.84 percent by Disney.
The joint venture, with a license to more than 30,000 Disney content assets, will be granted the exclusive right to distribute Disney films and production in India.
Nita M. Ambani will be the chairperson of the JV, with Uday Shankar as vice chairperson providing strategic guidance to the JV.
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 (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 JV will have over 750 million viewers across India and will also cater to the Indian diaspora across the world.
The JV will seek to lead the digital transformation of the media and entertainment industry in India and offer consumers high-quality and comprehensive content offerings anytime and anywhere. 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 livestreaming services, while delivering an innovative and convenient digital entertainment experience at affordable prices. With the addition of Disney’s acclaimed films and shows to Viacom18’s renowned productions and sports offerings, the JV will offer a compelling, accessible and novel digital-focused entertainment experience to people in India and the Indian diaspora globally.
Speaking about the JV, Mukesh D Ambani, chairman and 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. We welcome Disney as a key partner of Reliance group.”
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.”
Uday Shankar, co-founder of 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. All of us are committed to delivering exceptional value to our audiences, advertisers, and partners. This joint venture is poised to shape the future of entertainment in India and accelerate the Hon’ble Prime Minister’s vision of making Digital India a global exemplar.”
The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of Calendar Year 2024 or first quarter of Calendar Year 2025.
Goldman Sachs is acting as financial and valuation advisor and Skadden, Arps, Slate, Meagher & Flom LLP, Khaitan & Co and Shardul Amarchand Mangaldas & Co are acting as legal counsels to RIL and Viacom18 on the transaction. Ernst & Young has provided an independent valuation to RIL and Viacom18, while HSBC India acting as financial advisor has provided a Fairness Opinion to Viacom18.
The Raine Group is acting as lead financial advisor to Disney on the transaction. Citi is acting as a financial advisor to Disney. Cleary Gottlieb served as lead outside counsel to Disney and Covington & Burling and AZB served as legal counsels to Disney on the transaction. BDO has provided an independent valuation to SIPL.
As reported by Storyboard18, this high value deal is expected to create ripples in the Indian media ecosystem. Experts foresee creation of a monopoly with significant negotiation power over advertisers.
“The deal will have a significant impact in the media landscape potentially leading to a more monopolistic scenario, especially because the Zee-Sony deal did not materialise. If the deal goes through, together Viacom18 and Disney+Hostar be gaining a substantial market share, with anticipated shares of around 40 percent in TV and 35 percent in digital,” Karan Taurani, senior vice president at Elara Capital had said.
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