Disney and Reliance Join Forces: Merger to Create Entertainment Powerhouse in India

In a significant move that could reshape India's media landscape, Reliance Industries, the country's most valuable company, and global entertainment giant Walt Disney have inked a non-binding term sheet to merge their Indian media operations. Citing undisclosed sources, the Economic Times reported this groundbreaking development on December 25.

Under the proposed merger, Reliance is set to hold a controlling stake of 51 percent through a combination of shares and cash, while Disney would retain the remaining 49 percent. This strategic move grants more control to Mukesh Ambani's Reliance group, solidifying their position in India's fiercely competitive media and entertainment sector.

The deal, projected to be finalized by February, has Reliance ambitiously aiming to conclude the process by the end of January, pending regulatory approvals. As of now, neither Reliance nor Disney has officially responded to Reuters' requests for comments.

Recent reports from Reuters indicated that executives from both companies were engaged in discussions in London, laying the groundwork for the forthcoming media merger. This collaboration is poised to create one of India's largest entertainment conglomerates, directly competing with established television networks such as Zee Entertainment and Sony, as well as streaming giants Netflix and Amazon Prime.

Reliance, already a key player in the media landscape, operates numerous TV channels and the JioCinema streaming app through its media and entertainment unit, Viacom18. The rivalry between Ambani's conglomerate and Disney has intensified, with Reliance enticing audiences by offering free streaming of the Indian Premier League cricket tournament—a digital rights domain once controlled by Disney in India.

This competitive strategy has prompted a notable exodus of users from Disney's streaming app Hotstar in recent quarters. Recognizing the shifting dynamics, Disney has been exploring strategic options for its India business since early this year, including a potential sale or joint venture partnership involving its extensive portfolio of TV channels.

As per the reported terms of the proposed deal, a new unit under Reliance's Viacom18 would gain control of Star India through a stock swap. Financial details reveal that both parties are considering a substantial investment of $1 billion to $1.5 billion in this venture. However, it remains unclear whether this figure represents the total investment or the individual contributions from each entity.

The governing board of the merged entity is anticipated to feature an equal number of directors from Reliance and Disney, with a minimum of two representatives each. Moreover, discussions are underway regarding the inclusion of at least two independent directors, although this aspect might undergo modifications in the coming weeks.

As the Indian media and entertainment landscape undergoes transformative changes, the Reliance-Disney merger holds the promise of reshaping the industry's dynamics, creating synergies that could redefine the way content is produced, distributed, and consumed in the rapidly evolving digital age.

Source: Reuters.com