Reliance Industries Limited (RIL) and Walt Disney Co have signed a binding agreement to merge their media businesses in India, as per a Bloomberg report on Sunday. The proposed merger will bring together Reliance’s media units and Disney’s Indian operations under one new entity.
As per the pact, Reliance’s media arm and its affiliates will own at least 61% stake in the combined entity while Disney will hold the remaining 39% share. But the final stake distribution may change depending on how Disney’s other India assets are valued at the time of closing the deal.
This development comes just weeks after reports of Disney agreeing to sell a majority 60% stake in its India operations to Reliance-owned Viacom18 for $3.9 billion. The impending Reliance-Disney merger is expected to be formally announced in the coming week.
Reliance’s Bet on India’s Booming Media Industry
Merge Disney will mark Reliance’s big bet on India’s rapidly growing media and entertainment industry. Reliance already owns Viacom18 which runs popular TV channels and OTT platform Voot.
Viacom18 recently won the digital streaming rights for Indian Premier League cricket tournament, edging out Disney’s Hotstar. Reliance is now gearing up to take on rivals like Zee-Sony and Amazon Prime Video in the fiercely competitive video streaming space with its Disney+ Hotstar service.
Reliance Chairman Mukesh Ambani has made no secret of his ambitions to conquer India’s exploding digital content market. Experts believe the Disney merger will provide Reliance the right ammunition in form of top media brands and premium content.
Disney Counts on Reliance to Reverse India Struggles
For Disney, this merging is as a lifeline to revive its struggling India business. Despite owning top entertainment brands like Star India and Hotstar, Disney has struggled to fully capitalize on India’s media and digital boom.
Disney had bet heavily on Hotstar to drive its growth in India but has struggled to compete with deep-pocketed rivals. It reported a loss of Rs 2,400 crore in fiscal year 2022 from its India operations. Disney wishes that combining with Reliance will help turnaround its fortunes in one of the world’s fastest growing entertainment markets.
The Road Ahead for Reliance-Disney Combine
The merged entity will control the largest portfolio of TV channels, OTT platforms, movie studios and news outlets in India. It will house major brands like Star Plus, Hotstar, Colors, Voot, Disney, Marvel and National Geographic among others.
But, the Reliance-Disney combine will face stiff competition from rivals like Zee-Sony and Amazon which are also placing huge bets on India’s booming digital content space.
The real test will be their ability to churn out original content at scale to capture India’s rapidly growing online user base. Online video subscriptions in India are expected to touch 50 million by 2024 from under 20 million now. Using Disney’s global content catalogue with Reliance’s execution and distribution prowess will be crucial.
For Reliance the Disney India deal will be a perfect complement to its technology strengths with Jio’s reach of over 400 million users. Reliance is ready to bet big that a content distribution combo will be a sure shot winner in India’s digital economy.