Reliance, Disney May Announce Star-Viacom18 Merger This Week
RIL, which will buy out Paramount’s stake in Viacom18, may own 61%, while Disney will hold 33% in co
Javed Farooqui (THE ECONOMIC TIMES; February 26, 2024)

Mumbai: Reliance Industries and the Walt Disney Company have signed a binding agreement to merge Viacom18 and Star India, with the deal expected to be announced early this week, people privy to the development told ET. The deal, which has been in the works for over four months, will create India's largest media empire, spanning TV broadcasting, streaming, movies and sports.

The two media companies generated revenue of Rs. 25,000 crore between them in FY23. "The merger deal has finally been signed after months of negotiations. The announcement will happen early this week. It was expected to happen late last week," a top executive told ET on the condition of anonymity.

According to another person, Reliance may own 61% of the proposed combined company, with Disney holding 33% and Bodhi Tree Systems having the remaining 6%.

Despite being the larger of the two entities, Disney's Star India has seen its valuation drop to roughly $4 billion, accounting for the anticipated loss from its sports business. Viacom18 was valued at roughly $4 billion when Reliance and Bodhi Tree infused over Rs. 15,000 crore into the company in April last year. Paramount Global, a shareholder in Viacom18, is set to exit the company with Reliance buying its stake. In the US, the Shari Redstone-promoted company has become an acquisition target.

"Reliance is likely to invest $1-$2 billion, with a large part of that being deployed to infuse funds into the merged entity and a part going into the buyout of Paramount's stake," said a third person, asking not to be named.

Disney is expected to reduce its India exposure by diluting its stake in the merged entity, another person said. "Disney doesn't see India as a key priority since it wants to strengthen its position in the US, where it is facing major challenges," the person added. Reliance and Disney declined to comment.

Uday Shankar, who is the promoter of Bodhi Tree along with James Murdoch, is expected to lead the merged entity. Currently, Bodhi Tree owns 15.97% of Viacom18, while Paramount holds 13%.

The proposed combined Star-Viacom18 entity will be a dominant force in the TV broadcasting industry, with more than 100 TV channels like Star Plus, Colors and Star Sports. The entity will also have two streaming platforms, Disney+ Hotstar and Jio Cinema, with dominant market shares in subscription and advertising video-on-demand segments.

According to legal experts, the Competition Commission of India will scrutinize the merger deal due to the proposed merged entity's market share of over 40% in both TV and streaming. Star-Viacom18 entity will own sports assets like the Pro Kabaddi League and Indian Super League, which is a 65:35 joint venture between Reliance and Disney.

The combined entity will have the TV and digital rights of all key sports properties including the Indian Premier League; International Cricket Council; cricket boards of India, Australia and South Africa; PKL, ISL, English Premier League; NBA and Olympics.

The combined investments of the two companies in the sports business are pegged at $10 billion with IPL alone accounting for $6 billion, followed by $3 billion in ICC rights.

The development comes at a time when the proposed merger between Sony Group-Culver Max Entertainment and Zee Entertainment collapsed last month due to disagreement over who would lead the combined company.
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THE TIMES OF INDIA (February 26, 2024)

Walt Disney and Reliance Industries have signed a binding pact to merge their media operations in India, according to people familiar with the matter, as the US entertainment giant recasts its strategy amid intense competition in the country.

The media unit of Reliance, controlled by billionaire Mukesh Ambani, and its affiliates are expected to own at least 61% in the merged entity, with Disney holding the rest, the people said, asking not to be identified as the information is not public.

The latest milestone, along with other details, are likely to be announced early this week, the people said. A Disney representative declined to comment. A Reliance spokesperson didn’t respond to a query on the signing of the binding pact.

The stake split between the partners may change, depending on how Disney’s other local assets are factored in by the time the deal is closed, the people said. Disney owns a minority stake in broadcast service provider, Tata Play, which Reliance may consider acquiring, according to local news reports.

Disney has been grappling with challenges in India such as retaining subscribers and securing coveted media assets, while Reliance has cornered a larger slice of the local media and entertainment businesses in recent years. Together, they would make a formidable media behemoth in one of the world’s fastest-growing markets.