Reliance and Disney will merge to create Indian huge media house

India’s Reliance Industries and Walt Disney from the United States have declared the consolidation of their television and streaming media assets in India, establishing an entertainment powerhouse valued at 8.5 billion USD, significantly surpassing competitors in the world’s most populous nation.

Mukesh Ambani, Asia’s wealthiest individual and leader of Reliance, will infuse 1.4 billion USD into the unified entity, resulting in the company and its affiliates holding over 63% ownership. Meanwhile, Disney will retain approximately 37%, as outlined in a joint statement issued on this week.

Disney tries to stop the exodus of users to other platforms

For Disney, this merger comes after a prolonged effort to stem the exodus of users from its struggling streaming business in India, compounded by the financial strain from substantial payments for Indian cricket rights. This serves as another illustration of the challenges faced by foreign businesses seeking growth in India.

The merger places the valuation of Disney’s India business at roughly one-fourth of its 15 billion USD worth when acquired through the Fox deal in 2019.

The joint statement from the companies indicates that the merged venture is valued at around 8.5 billion USD on a post-money basis, although the methodology for this valuation was not detailed.

Mukesh Ambani declared, “This is a groundbreaking agreement that marks a new era in the Indian entertainment industry.” Nita Ambani, his wife, is set to assume the role of chairperson, while former top Disney executive Uday Shankar will serve as vice-chair.

Upon completion, the combined Reliance-Disney entity will boast 120 TV channels and two streaming platforms, solidifying Ambani’s dominance in India’s 28 billion USD media and entertainment sector.

Reliance-Disney will become the leading TV and streaming platform in India

The joint venture is poised to become a leading platform for TV and digital streaming, offering a rich array of entertainment and sports content in India by amalgamating iconic media assets, stated the companies in the collective announcement.

This strategic agreement is anticipated to fortify Reliance and Disney against competition from established rivals like India’s Zee Entertainment and Japan’s Sony, as well as competing with streaming giants Amazon and Netflix.

The announcement closely follows the cancellation of a 10 billion USD merger between Sony and Zee, which, if successful, would have posed a formidable challenge to the collaborative efforts of Reliance and Disney.

Disney is trying to streamline its businesses

This deal aligns with Disney’s global efforts to streamline its businesses, led by CEO Bob Iger, who returned to the position in November 2022, less than a year after his retirement. The company has undergone restructuring to enhance cost-effectiveness. Despite these efforts, activist investor Nelson Peltz continues to exert pressure on Disney to reduce expenses, establish a profitable global streaming business, enhance the movie studio’s performance, and refine succession planning.

In November, Iger expressed Disney’s interest in maintaining a presence in India but acknowledged the exploration of various options. Reflecting on the joint venture with Reliance, Iger declared that Reliance has a deep understanding of the Indian market and consumer and the collaboration would enable both companies to “better serve consumers with a broad portfolio of digital services and entertainment and sports.”