In a strategic move, Walt Disney and Indian conglomerate Reliance are set to merge their Indian businesses, combining the Star India and Viacom18 units into the newly formed Star India joint venture, valued at approximately $8.5 billion. Reliance, led by Asia’s wealthiest individual, Mukesh Ambani, will control the joint venture, injecting $1.4 billion into its growth strategy.
Nita Ambani, wife of Mukesh Ambani, will chair the joint venture, with Uday Shankar, a Viacom18 board member, serving as vice chairperson. The ownership structure will consist of a 16.34% interest for Reliance, 46.82% for Viacom18, and 36.84% for Disney.
This merger, subject to regulatory approvals, is expected to be completed in either the last quarter of the current year or the first quarter of 2025. The collaboration aims to tap into the vast Indian market, boasting over 750 million viewers, offering long-term value for the joint venture.
Disney anticipates recording noncash pretax impairment charges between $1.8 billion and $2.4 billion in the current quarter, with a substantial portion attributed to the write-down of the net assets of Star India. Despite facing subscriber losses and implementing a cost-cutting initiative, Disney expresses enthusiasm for strengthening its presence in India through this joint venture.
Significant boost for streaming ambitions
Reliance Industries sees this joint venture as a significant boost to its video streaming ambitions in the second-largest internet market globally. With the combination of Viacom18 and Star India, two major streaming platforms, Disney+ Hotstar and JioCinema, will come under a single owner.
JioCinema, with about 237 million monthly active users as of September 30, 2023, including 33 million daily active users, will merge with Disney+ Hotstar, currently leading the country’s subscription-based video streaming market with 38.3 million subscribers. This consolidation positions the merged entity strongly across entertainment and sports.
The merged entity, valued at Rs 70,352 crore ($8.5 billion) on a post-money basis, will be controlled by Reliance Industries, which plans to invest Rs 11,500 crore ($1.4 billion) for its growth strategy. Recognizing India as a value-centric market, the joint venture aims to offer bundled plans, combining movies, sports, and a global catalogue for a premium fee.
Karan Taurani, Senior Vice President at Elara Capital, notes the potential for large-scale success due to JioCinema’s extensive reach through Jio’s last-mile connectivity. He predicts a negative impact on global streaming services like Netflix and Amazon Prime Video if JioCinema continues to offer free content.
Further Details of JV
The joint venture also secures exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets. This positions the collaboration to provide a comprehensive entertainment experience at affordable prices, catering to the preferences of the Indian audience.
The move has already demonstrated success, with the joint venture registering a world record for the highest number of concurrent users during the IPL 2023 final match, drawing in over 32 million simultaneous viewers. Viacom18’s previous deals with media giants, making JioCinema the exclusive streaming home for their content brands, further solidify the joint venture’s potential dominance in the Indian streaming market.
As the deal progresses, Disney will have three directors on the joint venture’s board, with Reliance having five seats. The collaboration signifies a dynamic shift in the Indian entertainment landscape, with the joint venture poised to leverage its combined strengths to capture a significant share of the rapidly growing digital streaming market.
Thus, the Disney-Reliance merger creates a formidable alliance in the Indian entertainment industry, combining resources to tap into the immense potential of the country’s digital streaming market. The joint venture’s comprehensive approach, combining local and global content with exclusive rights to Disney productions, positions it as a major player in the evolving landscape of digital entertainment in India.
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