Reliance, Disney Join Hands To Create $8.50 Bln Media Behemoth In India

India’s Reliance Industries Ltd. and US-listed Walt Disney Company agreed to merge their digital streaming and television assets in India to form a media giant valued at $8.50 billion.

Both the companies and Reliance-backed Viacom 18 Media Private Ltd. (Viacom18) signed binding definitive agreements to form a joint venture (JV) that will combine the businesses of Viacom18 and Disney's Star India Private Ltd., according to a stock exchange announcement.

As part of the transaction, the media undertaking of Viacom18 will be merged into Star India through a court-approved scheme of arrangement. In addition, the Indian oil-to-telecom conglomerate plans to invest 11,500 crore rupees ($1.40 billion) into the JV for its growth strategy.

“This is a landmark agreement that heralds a new era in the Indian entertainment industry,” Reliance Chairman and Managing Director Mukesh Ambani said.

The transaction values the JV at 70,352 crore rupees ($8.5 billion) on a post-money basis, excluding synergies, according to the statement.

Reliance will control and own a 16.34% stake in the JV, while Viacom18 and Disney will hold a 46.82% stake and 36.84% stake in the venture, respectively.

Disney may also contribute certain additional media assets to the JV, subject to regulatory and third-party approvals.

LEADER IN THE MAKING

Nita Ambani, wife of billionaire Mukesh Ambani, will be the chairperson of the combined entity, the companies said in a joint statement. Uday Shankar, co-founder of Bodhi Tree Systems, will be the vice chairperson and provide strategic guidance to the venture.

The JV will be one of the leading TV and digital streaming platforms for entertainment and sports content in India.

The merged entity will bring together media assets across entertainment (Colors, StarPlus, StarGOLD) and sports (Star Sports and Sports18), including access to 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, according to the statement.

The JV will also be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets, it said.

DEAL ENABLERS

Goldman Sachs is acting as financial and valuation advisor, while Skadden, Arps, Slate, Meagher & Flom LLP, Khaitan & Co and Shardul Amarchand Mangaldas & Co are acting as legal counsels to Reliance and Viacom18 on the transaction.

Ernst & Young provided an independent valuation to Reliance and Viacom18, while HSBC India acting as financial advisor gave a Fairness Opinion to Viacom18.

The Raine Group is acting as lead financial advisor to Disney on the transaction, while Citi is acting as a financial advisor to Disney.

Cleary Gottlieb served as lead outside counsel to Disney, while Covington & Burling and AZB served as legal counsels to Disney on the transaction. BDO provided an independent valuation to Star India.

The transaction is likely to be completed in the last quarter of 2024 or the first quarter of 2025, subject to regulatory, shareholder and other customary approvals.

STAR INVESTMENT

Separately, Mumbai-based Reliance said its board approved a primary investment of 11,500 crore rupees in Star India to acquire a 16.34% stake in the company as per the terms of the subscription agreement between the parties.

The conglomerate said the investment may be a related-party transaction since Star India is a related-party of Football Sports Development Ltd., in which Reliance along with its subsidiary holds a 65% stake. The investment is on arm’s length basis.

Star India, incorporated on 8 February 1994, reported a standalone turnover of 17,332.78 crore rupees in FY23, up from 15,500.77 crore rupees a year earlier, according to the statement.

Note: $1 = 82.8954 Indian rupees

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