Reliance-Walt Disney joint venture set to herald a new era in Indian entertainment industry

Billionaire Mukesh Ambani's Reliance Industries and media giant Walt Disney announced their much anticipated joint venture in India on Wednesday, a move that will create an entertainment behemoth in the country spread across entertainment, and sports networks as well as two digital streaming platforms.

As per the definitive agreements signed between the two, the businesses of Reliance-owned Viacom18 and Disney's Star India will be combined. The media undertaking of Viacom18 will be merged into Star India Private Limited through a court-approved scheme of arrangement.

Reliance will invest Rs 11,500 crore, or about $1.4 billion, in the joint venture.

Reliance Industries will hold 16.34 per cent in the JV, Viacom18 will have 46.82 per cent stake and Disney will get 36.84 per cent. The deal values the JV at Rs 70,352 crore ($8.5 billion) on a post-money basis, excluding any synergies.

Nita Ambani will be the chairperson of the JV, while Uday Shankar, the co-founder of Bodhi Tree Systems, will be the vice-chairperson, providing strategic guidance to the venture.

The coming together of Reliance and Disney in India creates a leading TV and digital platform for entertainment and sports content with TV channels such as Star Plus, Star Gold, Colors, Star Sports and Sports18, apart from two streaming platforms - Disney+ Hotstar and JioCinema.

"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," the two companies said in a statement.

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.

Mukesh Ambani, the chairman and MD of RIL, termed it a landmark agreement that would herald 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," he said.

Disney has strong sports properties like English Premier League football and the Indian Premier League. In 2022, however, the Board of Control for Cricket in India (BCCI) split the TV and digital rights for the 2023-27 IPL cycle separately. While Star Sports retained IPL telecast rights, Viacom18 bagged the digital streaming rights and the latter also streamed it for free on JioCinema. Viacom18 had earlier also secured a deal with Warner Bros. to stream popular HBO content on JioCinema, which used to be earlier streamed on Hotstar. This hit Disney in India hard.

Bog Iger, the CEO of The Walt Disney Company, said the opportunities this JV with Reliance would provide will 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," said Iger.

The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of 2024 or first quarter of 2025.

The joint venture is poised to shape the future of entertainment in India, feels Uday Shankar. Notably, Shankar was the former chairman and CEO of Star India and the president of Walt Disney Asia Pacific before he left and joined hands with Lupa Systems founder and CEO James Murdoch to set up investment platform Bodhi Tree in February 2022.

Bodhi Tree holds 15.97 per cent stake in Viacom18, as per earlier reports.

"We are privileged to be enhancing our relationship with Reliance to now also include Disney, a global leader in media and entertainment. All of us are committed to delivering exceptional value to our audiences, advertisers, and partners," said Shankar.

In the linear broadcasting space, Star India has a portfolio of 77 channels across nine languages and Viacom has 40 channels across genres. So, the combined entity will have 117 TV channels as well as the two streaming platforms.

Analysts have estimated that they may have to sell some channels in order to get a green light from the competition regulator; still it will have a significant heft in the market.

"The combined entity may become a dominant player across multiple languages, particularly select language GECs. The larger size can potentially result in enhanced bargaining power with content producers and advertisers," Pulkit Chawla, media analyst at Emkay Global Financial Services had said in an earlier report.

In the OTT segment, the deal could provide a fillip to Reliance’s ambitions, with a well-established library of Disney Hotstar available at its disposal, rather than having to build one from the ground up, he had added.

This deal comes just a little over a month after Zee Entertainment and Japanese entertainment giant Sony called off the proposed merger of their Indian broadcasting businesses.