Reliance-Disney Star Ink Historic Deal: Reliance Industries Ltd, led by Mukesh Ambani, and global entertainment giant Walt Disney Co. have recently inked a non-binding agreement in London, propelling them closer to what is expected to be the country’s most significant entertainment and media merger. Reports suggest that the two conglomerates are poised to finalize this historic deal by February 2024, with the potential to reshape the entire landscape of streaming and viewing experiences in India.
The signing of the term sheet, which occurred in the UK, involved key figures such as Kevin Mayer, a former Disney executive, and Manoj Modi, a close aide of Mukesh Ambani. Despite initial ambitions to wrap up the mega-merger by January, sources indicate that commercial ramifications and regulatory approvals are likely to extend the process into February.
The potential merger has been in the negotiation phase for months, and the non-binding agreement signals a significant step towards the consolidation of Reliance-owned Viacom18 and Disney Star. This merger is anticipated to have a profound impact on the Indian entertainment sector, with far-reaching consequences for both companies and consumers.
Details of the Reliance-Disney Star Deal
1. Corporate Structure:
Through the mega-merger, Viacom18, owned by Reliance, will establish a step-down subsidiary absorbing a substantial portion of Star India’s stock, resulting in a 51-49 percent share split between the two entities.
2. Stake Distribution:
Reliance is poised to hold a majority stake in the merged company, with a 51 percent ownership, while Walt Disney Co. will own the remaining 49 percent.
3. Inclusions in the Deal:
The deal encompasses Reliance’s OTT platform, Jio Cinema, and Disney’s popular OTT app, Disney+ Hotstar. This collaboration is expected to provide a boost to Hotstar, which has been grappling with significant losses.
4. Financial Investment:
Both Reliance and Disney Star are expected to invest over $1.5 billion in the merger, granting Reliance distribution control over Star India’s channels.
5. Impact on Cricket Season:
The merger will extend beyond TV channels and OTT platforms, focusing on advertising prowess, particularly during India’s cricket season, promising a transformative viewing experience for sports enthusiasts.
6. Strategic Interests:
Disney Star’s interest in the deal is heightened by bidding wars with Reliance over cricket streaming rights, aiming to enhance its presence in the Indian market.
7. Control Dynamics:
While Reliance will be the controlling party, Disney stands to benefit significantly, especially considering the profitable performance of its TV channels in India.
8. Board of Directors:
Mukesh Ambani’s eldest son, Akash Ambani, is expected to secure a position on the board of directors. Uday Shankar of Bodhi Tree, a major stakeholder in Viacom18, is also a top contender for a board seat.
9. Competition in the Streaming Industry:
The newly formed entity, emerging from the merger, is expected to rival streaming services like Netflix and Amazon, potentially reshaping the competitive landscape.
10. Regulatory Scrutiny:
One key area of scrutiny is the streaming businesses and their influence on advertising during the cricket season, signalling potential regulatory challenges that the merged entity may need to navigate.
As the Reliance-Disney Star mega-merger progresses, it holds the promise of not only transforming the entertainment experience for consumers but also reshaping the dynamics of the Indian media industry. The fate of this monumental deal is eagerly awaited, with eyes set on February 2024 as the potential milestone for its completion.
