Reliance Industries Ltd has struck a lucrative bargain to become the senior partner in a joint venture with the Walt Disney Co., putting itself atop the leaderboard in one of the world’s fastest-growing media and entertainment markets.
On Wednesday, RIL subsidiary Viacom18 and Star India, Disney’s Indian unit, announced the merger of their businesses to create one of India’s largest TV and digital streaming platforms.
Under the terms of the agreement, Viacom18’s media operations will be merged with Star India Pvt Ltd (SIPL) through a court-approved scheme of arrangement. The joint venture, valued at Rs 70,352 crore ($8.5 billion) on a post-money basis, will see RIL injecting Rs 11,500 crore ($1.4 billion) into the venture to support its growth strategy.
“Post completion of the above steps, the JV will be controlled by RIL and owned 16.34% by RIL, 46.82% by Viacom18 and 36.84% by Disney,” according to the joint announcement by RIL and Disney.
Nita Ambani will assume the role of Chairperson of the merged entity, with former Walt Disney executive Uday Shankar, joining as Vice Chairperson.
In the JV, Star India’s business is valued at Rs 28,000 crore ($3.1 billion), and Viacom18 is valued at Rs 32,000 crore ($4 billion).
Notably, Star India’s operations, which were valued at $15 billion in 2018 (when Rupert Murdoch sold Star India to Disney), saw a significant reduction to $3.1 billion in 2023, which analysts attributed to RIL’s dealmaking and negotiating prowess.
The new board will have 10 members, with RIL nominating five, Disney three, and two independent directors.
In the press statement, both companies said that the joint venture aims to become a dominant force in television and digital streaming, boasting a combined viewership of over 750 million across India and the global Indian diaspora. With a portfolio including iconic brands such as Colors, StarPlus, and Hotstar, the venture is poised to offer consumers a diverse range of entertainment and sports content, the statement said.
Central to the joint venture’s strategy is its commitment to lead the digital transformation of India’s media industry. Leveraging the expertise and resources of Viacom18 and Star India, the venture plans to deliver high-quality content to consumers anytime, anywhere, and at affordable prices.
The inclusion of Disney’s acclaimed films and productions further enhances the joint venture’s appeal, with exclusive rights to distribute Disney content in India and access to over 30,000 Disney assets.
Speaking on the agreement, Mukesh Ambani, Chairman and 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 Walt Disney Co., 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.”
Uday Shankar, who is also co-founder of Bodhi Tree Systems, which owns close to 16 percent of Viacom18 said, “All of us are committed to delivering exceptional value to our audiences, advertisers, and partners. This joint venture is poised to shape the future of entertainment in India and accelerate the Hon’ble Prime Minister’s vision of making Digital India a global exemplar.”
The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of 2024 or the first quarter of 2025.
Goldman Sachs and Raine Group served as financial advisors for the transaction, with Skadden, Arps, Slate, Meagher & Flom LLP, Khaitan & Co, and Shardul Amarchand Mangaldas & Co. served as the legal counsel to RIL and Viacom18. Cleary Gottlieb and Covington & Burling were legal counsels to Disney, with BDO providing an independent valuation to SIPL.
The Viacom18-Star India joint venture represents a milestone moment in the Indian media industry, promising to redefine the future of entertainment for millions of viewers nationwide.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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