Disney & Reliance Industries agree $8.5bn merger

Aarya

Disney and Reliance Industries have struck a deal to merge TV and streaming operations in India with the creation of a new entity valued at $8.5bn.

Details of the merger were first revealed earlier this month and will see Reliance Industries, which owns Viacom18 alongside Paramount and James Murdoch’s Bodhi Tree Systems, taking a 63% stake in the new company.

The arrangement will see Reliance invest $1.4bn into the combined venture, with Disney holding a 37% stake in the business. Nita Ambani, wife of Reliance boss Mukesh Ambani, is to become chair with Viacom 18’s Uday Shankar, a former Disney exec, becoming vice-chair.

The news comes two months since the companies struck a non-binding agreement around the merger, which notably will see streaming and broadcast rights to Indian Premier League cricket falling under the same roof.

Unpacking Disney’s unprofitable business in India

The deal draws a line under Disney’s loss-making streaming venture in India that began when the Mouse House acquired the Star India/Hotstar business from Fox as in 2019 as part of its $71bn acquisition of the US studio.

Disney+ Hotstar lost streaming rights for IPL 18 months ago to Viacom 18, leading to a considerable drop-off in subscribers. Instead, it picked up pay TV rights for around $3bn.

Conversely, Viacom18 has seen subscribers surge after it picked up streaming rights to the same IPL matches, also for around $3bn.

Disney+ Hotstar has been behind a growing number of originals such as Aarya, Hundred and Out Of Love, which sit alongside its library content.

It has, however, found itself under increasing competitive pressure in India since Viacom18 decided to make IPL free to view on its JioCinema streaming platform.

The combined entity will instantly become a major player in India, with the deal coming just weeks after Sony called off its planned $10bn merger between its Indian division and Zee Entertainment Enterprises.

The deal has been beset by regulatory issues, with reports emerging earlier this year that the Japanese giant was close to scrapping the merger.