Mukesh Ambani’s Reliance Industries and Disney Star are on the brink of a transformative merger, solidifying their intentions with the signing of a non-binding agreement in London last week. This strategic move is poised to reshape the entertainment landscape in India significantly. The mega-merger, expected to be finalized by February 2024, holds the potential to redefine the viewing and streaming experience in the country.
Despite initial aspirations to conclude the deal by January, the intricate processes involving commercial ratifications and regulatory approvals are anticipated to extend the timeline. This ambitious agreement comes after months of negotiations, culminating in the signing of a term sheet in the UK. The ceremony witnessed the presence of key figures such as Kevin Mayer, a former Disney executive, and Manoj Modi, a trusted aide to Mukesh Ambani.
The complexity of the deal involves Reliance-owned Viacom18 establishing a step-down subsidiary that will absorb a significant portion of Star India’s stock. This arrangement is expected to result in a 51-49 percent share split between the two conglomerates. Notably, Reliance is anticipated to hold a substantial stake in the merged entity, with cash transactions likely for controlling shares. The impact of this merger is not limited to Reliance, as it is also poised to provide a significant boost to Disney’s OTT app, Disney+ Hotstar, which has been grappling with substantial losses.
However, the ambitious merger has its challenges, particularly in the realm of regulatory scrutiny. One crucial area of focus is the streaming businesses of Disney and Reliance and their influence over advertising, particularly during the high-profile cricket season. This scrutiny could potentially reshape the dynamics of sports viewing in India.
As the Reliance-Disney Star deal advances, the fate of another major merger remains uncertain. The $10 billion merger between Zee Entertainment Enterprises and Sony Group Corp.’s local unit, announced two years ago, is still pending finalization. Both parties seek an extension to conclude the deal by January 2024. The unfolding events in the Indian media and entertainment industry are undoubtedly set to leave a lasting imprint on the global stage.
