Reliance Industries (RIL) and Walt Disney have signed a binding agreement to merge their media operations in India, a Bloomberg report stated, quoting people familiar with the matter. The report said Mukesh Ambani-led Reliance Industries is expected to own a 61 percent stake in the merged entity as Disney recasts its strategy in India amid intense competition in a complex media and entertainment market.
The report added that the distribution of shares among the partners could be altered based on the inclusion of Disney’s additional local assets at the time of finalizing the deal. Reliance Industries is also mulling the acquisition of Tata Play., a broadcast service provider, in which Disney holds a minority stake.
RIL’s Viacom18 and Walt Disney had signed a non-binding term sheet to merge their Indian media operations, last month. The valuation of the merger is reportedly around $4.5 billion approximately which is significantly below Disney’s initial expectation of $10 billion. Following prolonged negotiations, Disney’s assets in India were assessed to be valued at a considerably lower value than initially expected.
A paradigm shift is expected in the current media landscape once the merger goes through. Disney and Reliance would create a powerful and influential media giant in one of the largest and fastest growing entertainment markets in the world. As per the reports, Reliance is investing $1.5 billion for its 61 percent stake. In the past, the two media giants fought hard for the sports rights. But in 2022, RIL’s Viacom18 beat Disney and secured streaming rights for the prized cricket property – Indian Premier League (IPL).
“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 they’d be gaining a substantial market share, with anticipated shares of around 40 percent in TV and 35 percent in digital,” said Karan Taurani, senior vice president at Elara Capital, to Storyboard18.
The consolidation of premium cricket properties is a major advantage, enhancing bargaining power and allowing for better advertising prices.
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Viacom18 already has the digital streaming rights for IPL (Indian Premier League), along with the TV and digital broadcasting rights for India’s bilateral matches in T20I, ODI, and Test formats for both men’s and women’s cricket. In a bid to expand their viewer base, Viacom18 offered free streaming of the 2023 edition of the IPL on the JioCinema app. On the other hand, Disney Star exclusively holds the TV broadcasting rights for IPL and the digital rights for ICC events.
The combined strength of TV and digital for these premium cricket IPs is naturally expected to do wonders when it comes to AdEx boost for the company.
“Once a platform has a property like IPL, they have massive bargaining powers. In spite of being sold at a premium, IPL inventory being split in TV and digital had been a small roadblock. JioCinema has shown the world what they can achieve with free streaming,” said a media planner on conditions of anonymity, adding, “That and TV put together will be a massive force. Advertisers will not be able to say no to it.”
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However, the strength of the companies would not be restricted to cricket only. Disney’s operations in India include their OTT platform Disney+ Hotstar and their linear TV offerings which has a bouquet of 70 plus channels available in eight languages. On the other hand, Reliance’s Viacom18 houses over 38 TV channels across eight languages alongside their streaming platform JioCinema.
Beyond losing IPL’s digital rights to, Disney+ Hotstar also surrendered all HBO content offerings to JioCinema, resulting in the loss of a loyal audience for popular shows like Game of Thrones and Succession, among others.
In a separate interview with Storyboard18, Shashank Agarwal, advocate, Delhi High Court, said, “The significance of the deal between Reliance and Disney is not hidden from the public. Keeping in mind the failure of the Zee-Sony deal, this deal would indeed have a significant impact on the media and entertainment industry.”
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