The Mumbai bench of the National Company Law Tribunal (NCLT) has sanctioned the merger scheme between Walt Disney’s Star India and Reliance Industries Limited’s (RIL) Viacom18, following the Competition Commission of India’s (CCI) conditional approval of the multi-billion dollar deal.
The merger has become effective as the competition watchdog on Wednesday approved the merger subject to compliance with voluntary modifications. The scheme’s implementation was subject to the CCI approval.
“From the material on record, the scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy,” the division bench of technical member Anu Jagmohan Singh and judicial member Kishore Vemulapalli said in its 22-page order on Friday.
While disposing of the petitions, the tribunal noted that both Star and Viacom18 have fulfilled all the requisite statutory compliances. Furthermore, no objector has filed a petition against the scheme or any party has raised objections in the tribunal.
The merger will create India’s largest media and entertainment entity that will have a dominant presence in TV and digital. Currently, Star has 77 TV channels and a streaming platform, Disney+ Hotstar, while Viacom18 has 38 TV channels and a streaming platform, JioCinema.
Sources have told ET that Reliance and Disney have suggested multiple remedies to secure CCI approval including shutting a few entertainment channels across languages and freezing ad rates for two years, particularly for cricket. The merged entity is expected to have one streaming platform, JioCinema, with Disney+ Hotstar likely being absorbed into it.
At RIL’s annual general meeting on August 29, chairman Mukesh Ambani had described the Star India and Viacom18 merger as the dawn of a new era in India’s entertainment industry and welcomed Disney into the Reliance family.
He stated, “We are combining content creation with digital streaming. Our digital-first approach will deliver unparalleled content at affordable prices, catering to every consumer’s tastes. We are excited about this partnership and our commitment to providing world-class digital entertainment across the spectrum.”
The merged entity will be valued at Rs 70,352 crore, with a combined FY23 topline of Rs 25,000 crore.
On July 11, the NCLT had directed the two parties to serve notices of final hearing upon the central/state governments, tax authorities, and regulatory bodies like the Competition Commission of India (CCI) and the Ministry of Information and Broadcasting (MIB).
In their submission to the tribunal, Star and Viacom18 counsels said that no prior approval to the scheme is required from the MIB. However, they added that the approval from the MIB is required for the transfer of the TV channels of Viacom18 to Star India, which is to be secured after the tribunal sanctions the scheme.
The NCLT has directed both Star and Viacom18 to file a copy of this order along with a copy of the scheme with the Registrar of Companies (RoC) within 30 days from the date of receipt of the certified copy of this order.
The merger scheme has two stages: the transfer of Viacom18’s TV and streaming assets to its wholly owned subsidiary Digital18 and the demerger and vesting of these assets from Digital18 to Star India.
After Digital18 transfers Viacom18’s assets to Star, the company will allot proportionate shares to the former. Star will also allot shares to RIL for a Rs 11,500 crore fund infusion.
Following the allotment, Star’s shareholding will be divided among Walt Disney (36.63%), Digital18 (46.11%), and RIL (16.34%). RIL’s effective stake in the merged entity will be 56% while Bodhi Tree Systems will own 7%.
