Inside the Disney-Reliance US$8.5 billion media merger
Disney and Reliance Industries are now teaming up to create a massive media company.
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The backstory: In 1957, Dhirubhai Ambani launched a small yarn business in India. From those humble beginnings, it eventually grew into Reliance Industries, a heavyweight in India's business scene, dabbling in everything from petrochemicals to telecommunications. Today, his son Mukesh Ambani is at the helm and holds the title of Asia's richest man.
In June 2022, Reliance made headlines by snagging the streaming rights for the Indian Premier League cricket tournament and beating out Disney. Then, Reliance's Viacom18 secured the rights to air popular HBO shows in India like "Succession" and "House of the Dragon," which were previously Disney's domain.
More recently: Disney has been in India's market since 1993 through a joint venture with Modi Enterprises. In 2019, Disney Indian TV giant Star from 21st Century Fox for US$71 billion, which gave it access to dozens of TV channels and India's biggest streaming platform, Hotstar.
The development: Disney and Reliance Industries are now teaming up to create a massive media company valued at around US$8.5 billion. By joining Star India and Viacom18, they plan to reach around 750 million viewers. This partnership also secures exclusive rights to distribute Disney content in India, which is a major win for Reliance's streaming service, Jio Cinema. But before it's all official, they still need the green light from regulators and shareholders, which they expect to get by the end of this year or early 2025.
Reliance will own just over 63% stake in the new entity – 16.3% directly and 46.8% through Viacom18, in which it has a controlling stake – while Disney will hold the rest. Ambani's wife, Nita Ambani, will chair the company, with Viacom18's Uday Shankar as vice chair. When it comes to the boardroom, Disney will have three board seats, while Reliance will have five, plus two independent directors.
Key comments:
"India is the world's most populous market and we are excited for the opportunities that this joint venture will provide to create long-term value for the company," said Walt Disney CEO Bob Iger.
"This is a landmark agreement that heralds a new era in the Indian entertainment industry," said Mukesh Ambani.
"The combined entity will create a sports behemoth in India," said Jinesh Joshi, an analyst at India's Prabhudas Lilladher. "This merger will give Reliance great bargaining power when it comes to negotiating advertisement contracts ... For Disney, coming together with a bigger player, in terms of (financial) pockets, will give it a cash cushion."
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