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Reliance and Disney merge Indian media businesses to create $8.5 billion joint venture

Reliance and its portfolio Viacom18 and Disney will combine their media operations in India, creating the largest media entity in the world’s most populous country. Reliance, which will take control of the joint venture, will directly own 16.34% of the combined entity, valued at $8.5 billion. Disney will own 36.84% of the combined company, while Reliance-backed Viacom18 (which also includes Paramount Global and James Murdoch’s Bodhi Tree) will own 46.82%. Become.

Reliance, India’s most valuable company, sees an opportunity to expand its presence and streamline its presence in India’s fast-growing market by merging its media assets with Disney India. Stated. Reliance, which owns about 75% of Viacom18, plans to invest $1.4 billion in the joint venture for its growth strategy.

For Disney, the deal is bittersweet. The company once valued its India operations at around $16 billion, and thanks to its streaming business Hotstar, which became part of Disney India after its acquisition of MegaFox, the US giant has stakes in several streaming markets in Southeast Asia. We are now able to aggressively expand.

Additionally, Disney said in an SEC filing on Wednesday that the joint venture would result in non-cash pre-tax impairments of $1.8 billion to $2.4 billion, “about half of which will be attributed to Star India. ” reflects the write-down of net assets.” In this quarter.

Image: Morgan Stanley

The “strategic” merger between Reliance and Disney India will also bring together two of India’s leading streamers, JioCinema and Disney+Hotstar. The joint venture also includes access to dozens of Disney-owned television channels, exclusive rights to Disney films and other productions in India, and 30,000 additional assets. Between JioCinema and Hotstar, the combined entity will also be the digital home for content from HBO, Showtime, and NBCUniversal.

The combined unit will reach more than 750 million viewers across India, the companies said. The new venture comes at a time when major media giants are struggling in India. Last month, Sony called off the merger of its India unit with Zee Entertainment, ending two years of takeover talks that would have created a $10 billion media powerhouse in the South Asian market.

Mukesh Ambani, chairman of Reliance and Asia’s richest man, said the deal with Disney “is a landmark deal that heralds a new era for the Indian entertainment industry.”

He added: “We have always respected Disney as the world’s best media group and are very excited to form this strategic joint venture, which will bring us extensive resources, creative capabilities, and market insight. Together, we will be able to bring unparalleled content to audiences around the world at affordable prices.” Nation. We welcome Disney as a key partner of the Reliance Group. ”

The merger follows intense competition between Hotstar and JioCinema, which last year attracted top talent from Disney to strengthen its platform. Viacom18 also beat Disney’s $3 billion for five-year streaming rights to India’s popular cricket tournament, the Indian Premier League, breaking many of Hotstar’s previous viewership records in just one year. Disney paid the same amount in television rights fees. To attract users, both companies are streaming much of their catalog for free in India.

The new combined entity will acquire both digital and television rights to major cricket sporting events in India, including IPL and ICC matches. The 2023-27 IPL broadcast is currently under a joint venture, with Viacom18 having the digital streaming rights and Star having the television broadcasting rights.

Disney CEO Bob Iger said the joint venture “creates long-term value for the company.” He further added, “Reliance has a deep understanding of the Indian market and consumers, and together we will build India’s leading media company to better serve consumers with a broad portfolio of digital services, entertainment and sports content. “We will be able to provide this,” he added.

The merger will reunite former Star India CEOs Uday Shankar and James Murdoch with the business they previously built over a decade. Shankar left Star India in 2020 following a dispute with Disney. He and Murdoch then launched an Indian media investment vehicle, Bodhi Tree, with $1.7 billion in support from the Qatar Investment Authority, which invested more than $500 million of his $500 million in Viacom. 18. Mr. Shankar will return to the combined board as vice chairman.

The merger is subject to regulatory and shareholder approval, and the companies expect to complete it by the end of March 2025.

The entire story has been updated with additional details.


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