New Delhi, 28 Feb

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.

Under the deal, coming just over a month after the failed USD 10 billion merger of rivals Zee and Sony, Reliance and its affiliates will hold 63.16 per cent in the combined entity that will house two streaming services and 120 television channels. Disney will hold the remaining 36.84 per cent, the companies said in a statement.

Reliance has also agreed to invest at closing Rs 11,500 crore into the joint venture to give it the muscle to fight rivals such as Japan's Sony and Netflix. Disney + Hotstar has seen its paid subscriber base decline from around 55 million to about 40 million in the first quarter of FY24 because of Reliance's Jio Cinema winning exclusive rights for live sports. The combined entity will have the largest OTT subscriber base.

Media ventures of Reliance are currently housed in Network 18, which owns TV18 news channels as well as a plethora of entertainment (under the 'Colors' brand) and sports channels. NW18 also has stakes in moneycontrol.com, bookmyshow and publishes magazines. Its subsidiary NW18 owns the news channels CNBC/CNNNews. Reliance separately owns a movie production arm - JioStudios, and majority stakes in two listed cable distribution companies, Den and Hathway.

Disney + Hotstar was launched in India in 2020, post the acquisition of the entertainment assets of 21st Century Fox at a valuation of USD 71.3 billion, thereby taking over the operations of Star India and Hotstar. It housed entertainment and cinema channels such as StarPlus and StarGold as well as sports channels like Star Sports. While Disney + Hotstar rapidly increased their subscriber base initially with the streaming rights of cricket matches (IPL, World Cup), it lost the bid for the digital streaming rights in 2023-27 cycle, which was won by Reliance-backed Viacom18 for USD 720 billion, 12.92 per cent higher than what Star India had paid on an average per match value.

Nita Ambani, wife of billionaire and Reliance chairman Mukesh Ambani, will head the joint venture while Uday Shankar will be the vice chairperson. Shankar is a former top Disney executive and has a joint venture with James Murdoch, called Bodhi Tree.

The transaction values the joint venture at Rs 70,352 crore (USD 8.5 billion) on a post-money basis, excluding synergies. "Disney may also contribute certain additional media assets to the JV, subject to regulatory and third-party approvals," it said without elaborating.

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 (e.g. Colors, StarPlus, StarGOLD) and sports (e.g. Star Sports and Sports18) 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.

Mukesh D 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."