Reliance Industries and the Walt Disney Company have signed a binding agreement to merge Viacom18 and Star India, with the deal expected to be announced early this week, people privy to the development told ET. The deal, which has been in the works for over four months, will create India’s largest media empire, spanning TV broadcasting, streaming, movies and sports.
The two media companies generated revenue of ₹25,000 crore between them in FY23. “The merger deal has finally been signed after months of negotiations. The announcement will happen early this week. It was expected to happen late last week,” a top executive told ET on the condition of anonymity.
According to another person, Reliance may own 61% of the proposed combined company, with Disney holding 33% and Bodhi Tree Systems having the remaining 6%.
Despite being the larger of the two entities, Disney’s Star India has seen its valuation drop to roughly $4 billion, accounting for the anticipated loss from its sports business. Viacom18 was valued at roughly $4 billion when Reliance and Bodhi Tree infused over ₹15,000 crore into the company in April last year. Paramount Global, a shareholder in Viacom18, is set to exit the company with Reliance buying its stake. In the US, the Shari Redstone-promoted company has become an acquisition target.
“Reliance is likely to invest $1-$2 billion, with a large part of that being deployed to infuse funds into the merged entity and a part going into the buyout of Paramount’s stake,” said a third person, asking not to be named.
Disney is expected to reduce its India exposure by diluting its stake in the merged entity, another person said. “Disney doesn’t see India as a key priority since it wants to strengthen its position in the US, where it is facing major challenges,” the person added. Reliance and Disney declined to comment.
Uday Shankar, who is the promoter of Bodhi Tree along with James Murdoch, is expected to lead the merged entity. Currently, Bodhi Tree owns 15.97% of Viacom18, while Paramount holds 13%.
The proposed combined Star-Viacom18 entity will be a dominant force in the TV broadcasting industry, with more than 100 TV channels like Star Plus, Colors and Star Sports. The entity will also have two streaming platforms, Disney+ Hotstar and JioCinema, with dominant market shares in subscription and advertising video-on-demand segments.
According to legal experts, the Competition Commission of India will scrutinise the merger deal due to the proposed merged entity’s market share of over 40% in both TV and streaming. Star-Viacom18 entity will own sports assets like the Pro Kabaddi League and Indian Super League, which is a 65:35 joint venture between Reliance and Disney.
The combined entity will have the TV and digital rights of all key sports properties including the Indian Premier League; International Cricket Council; cricket boards of India, Australia and South Africa; PKL, ISL, English Premier League; NBA and Olympics.
The combined investments of the two companies in the sports business are pegged at $10 billion with IPL alone accounting for $6 billion, followed by $3 billion in ICC rights.
The development comes at a time when the proposed merger between Sony Group-Culver Max Entertainment and Zee Entertainment collapsed last month due to disagreement over who would lead the combined company.
Source: Economic Times