Disney-Reliance Mega Merger For Indian Entertainment Operations
A non-binding agreement has been signed by Reliance Industries Ltd (RIL) and Walt Disney Co, in London last week. This is, as part of moving ahead with the plan of creating the biggest media and entertainment business in India, the ET reported as sources in the know said. The negotiations have been going on for months to bring in the final agreement.
The merger concluded with a 51:49 stake holding pattern, which is in favour of Mukesh Ambani Group owning 51 percent, adding more power to the group. The rest, 49 percent would belong to the Disney Company. The agreement is to complete its commercial ratifications and regulatory approvals by February, though the Reliance Group is keen to complete the formalities by January end, reported the ET. Reliance’s Jio Cinema, which is a part of Viacom 18 would also be included in the pact.
This is Disney’s third entry into India, and much talked about in the last few months. The first being, the 1993 association with the K K Modi group, then with Ronnie Screwvala’s UTV – both of these did not perform well. Matters took a different shape in the year 2018, Disney got Rupert Murdoch’s entertainment business for $71.3 billion, and Star India was the Crown Jewel. With this third coming, and looking at the earnings call in November, the Walt Disney CEO Bob Iger has said that the company was looking at the options and would like to stay in India, to, “strengthen our hand,” and to “improve the bottom line”, reported the ET.
For now, it is known that the board would have an equal number of representations from both the Reliance Group and the Disney Company, with at least two directors each and that the parties have plans to invest $1 billion to $1.5 billion in the merger, reported the TOI. The Reliance Disney merger comes in as the Zee Entertainment Enterprises and Sony Group Corp.’s $10 billion merger, which was hailed as the biggest merger, is still not completed even after two years.
Looking at what the merger means, it could spell out as the biggest entertainment deal for India, which could compete with Netflix, Amazon Prime, Zee Entertainment and Sony. Reliance already has numerous TV channels, JioCinema and Viacom18. Earlier, Disney had witnessed an exodus of viewers, as Reliance JioCinema upped its viewer numbers. Reliance also streamed free, the IPL tournament, moving up in the OTT ranking platform. The rivalry for space was well seen. From early this year, Disney has been watchful in finding a venture partnership for its India arm.
