Walt Disney, Reliance Agree to Merge Media Ops to Create Rs 70,000 Crore Behemoth

In one of the biggest entertainment and media industry mergers, Walt Disney and Reliance Industries have agreed to merge their media operations in India with Reliance investing Rs 11,500 crore. Nita Ambani will be the Chairperson of the joint venture with Uday Shankar as Vice Chairperson providing strategic guidance to the joint venture.

Mumbai:Walt Disney Co and Reliance Industries on Wednesday announced signing of binding pacts to merge their media operations in India to create a Rs 70,000 crore behemoth.

Reliance and its affiliates will hold 63.16 per cent in the combined entity while Disney will hold the remaining 36.84 per cent, the companies said in a statement. Reliance has also agreed to invest around Rs 11,500 crore in the joint venture to grow the OTT business. Nita Ambani, wife of Reliance Industries chairman Mukesh Ambani, will head the joint venture while Uday Shankar will be the vice chairperson.

"Reliance Industries Limited (RIL), Viacom 18 Media Private Limited and The Walt Disney Company today announced the signing of binding definitive agreements to form a joint venture that will combine the businesses of Viacom18 and Star India. As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private Limited (“SIPL”) through a court-approved scheme of arrangement. In addition, RIL has agreed to invest at closing Rs 11,500 crore (~US$ 1.4 billion) into the joint venture for its growth strategy," a joint statement read.

The transaction values the Joint Venture at ₹70,352 crore ($ 8.5 billion) on a post-money basis, excluding synergies. "Post completion of the above steps, the JV will be controlled by RIL and owned 16.34% by RIL, 46.82% by Vlacom18 and 36.84% by Disney," the statement read.

Disney may also contribute certain additional media assets to the JV, subject to regulatory and third-party approvals. The JV will be one of the leading TV and digital streaming platforms for entertainment and sports content in India, bringing together iconic media assets across entertainment (eg Colors StarPlus, StarGOLD) and sports (eg. itar Sports and Sports 18) including access to highly anticipated events across television and digital platforms through JioCinema and Hotstar. The JV will have over 750 million viewers across India and will also cater to the Indian diaspora across the world.

"The JV will seek to lead the digital transformation of the media and entertainment industry in India and offer consumers high-quality and comprehensive content offerings anytime and anywhere. The combination of the media expertise, cutting-edge technology and diverse content libraries of Viacom18 and Star India will allow the JV to offer more appealing domestic and global entertainment content and sports livestreaming services, while delivering an innovative and convenient digital entertainment experience at affordable prices. With the addition of Disney's acclaimed flims and shows to Viacom18's renowned productions and sports offerings, the JV will offer a compelling, accessible and novel digital-focused entertainment experience to people in India and the indian diaspora globally," the statement added.

"The JV will also be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets, providing a full suite of entertainment options for the Indian consumer," it said.

Speaking about the JV, Mukesh Ambani, Chairman & Managing Director of Reliance Industries, said, "This is a landmark agreement that heralds a new era in the Indian entertainment industry. We have always respected Disney as the best media group globally and are very excited at forming this strategic joint venture that will help us pool our extensive resources, creative prowess, and market insights to deliver unparalleled content at affordable prices to audiences across the nation. We welcome Disney as a key partner of Reliance group".

Bob Iger, CEO of The Walt Disney Company, said, "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. Reliance has a deep understanding of the Indian market and consumer, and together we will create one of the country's leading media companies, allowing us to better serve consumers with a broad portfolio of digital services and entertainment and sports content."

Uday Shankar, Co-founder of Bodhi Tree Systems, said, "We are privileged to be enhancing our relationship with Reliance to now also include Disney, a global leader in media & entertainment. All of us are committed to delivering exceptional value to our audiences, advertisers, and partners. This joint venture is porsed to shape the future of entertainment in India and accelerate the Hon'ble Prime Minister's vision of making Digital India a global exemplar."

The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of Calendar Year 2024 or first quarter of Calendar Year 2025. Goldman Sachs is acting as financial and valuation advisor and Skadden, Arps, Slate, Meagher & Flom LLP, Khaitan & Co and Shandul Amarchand Mangaldas & Co are acting as legal counsels to RIL and Viacom18 on the transaction. Ernst & Young has provided an independent valuation.

The Raine Group is acting as lead financial advisor to Disney on the transaction. Citi is acting as a financial advisor to Disney. Cleary Gottlieb served as lead outside counsel to Disney and Covington & Burling and AZB served as legal counsels to Disney on the transaction. BDO has provided an independent valuation to SIPL.