Reliance and Disney merge for $8.5 billion Indian entertainment venture By Elets News Network - 05 March 2024

Reliance and Disney

Reliance Industries, under the leadership of Mukesh Ambani, Asia’s wealthiest individual, is set to merge its television and streaming media operations in India with those of Walt Disney, based in the United States. This move will establish a formidable $8.5 billion entertainment conglomerate, positioning it well ahead of its competitors in India, the nation with the highest population globally.

In this strategic partnership, Reliance will contribute $1.4 billion to the combined venture, securing over a 63 percent stake for itself and its associates, while Disney will retain approximately 37 percent ownership. The announcement was made through a joint statement late Wednesday evening.

This merger comes at a crucial time for Disney, which has been facing challenges, including a decline in subscribers to its streaming services in India and financial burdens from substantial investments in Indian cricket broadcasting rights. This situation underscores the difficulties international firms often encounter when expanding in the Indian market.

The transaction suggests a significant decrease in the value of Disney’s Indian business, now estimated at roughly a quarter of the $15 billion valuation at the time of its acquisition as part of the Fox deal in 2019, as per sources close to Reuters.

Mukesh Ambani announced the merger as a milestone that marks the beginning of a new chapter in India’s entertainment sector, with Nita Ambani taking the role of chairperson and former senior Disney executive Uday Shankar appointed as the vice-chair.

The merged entity, boasting 120 television channels and two digital streaming platforms, is set to overshadow its competition in India’s $28 billion media and entertainment industry.

The joint venture aims to be a leading provider of television and digital streaming for entertainment and sports content in India, merging renowned media properties. This collaboration is designed to fend off challenges from traditional competitors, such as Zee Entertainment and Sony of Japan, and digital streaming giants Amazon and Netflix.

This announcement follows the collapse of a proposed $10 billion merger between Sony and Zee, which would have created a significant competitor for Reliance and Disney.

Furthermore, this merger occurs as Disney is undergoing global restructuring efforts to streamline operations. Disney CEO Bob Iger, who reassumed his role in November 2022, has initiated a company-wide restructuring to enhance efficiency and reduce costs.

Also Read | Reliance join forces with Brookfield and Digital Realty to build data centres across India

Despite facing pressure from activist investor Nelson Peltz for further cost reductions and improvements across various business segments, Iger expressed his commitment to the Indian market and the belief that this deal would enable Disney to more effectively cater to its consumers in India with a comprehensive range of digital services and content in both entertainment and sports.

Related News