Unveiling Disney’s $8.5 Billion Merger Blueprint for India
In a strategic move to tackle challenges in India’s competitive streaming market, Disney is set to merge its Star India service with Viacom18, backed by Mukesh Ambani’s Reliance Industries, in an $8.5 billion deal. This collaboration, led by Reliance, promises to become a dominant force in the Indian media landscape, with a significant injection of $1.4 billion from Reliance to fuel growth.
Mukesh Ambani, Asia’s wealthiest individual, hailed the agreement as a “landmark” that ushers in a new era in the Indian entertainment industry. The deal, subject to regulatory approval, is anticipated to be concluded by the end of this year or early next year, forming a conglomerate with over 120 channels reaching approximately 750 million customers across India.
Viacom18, a joint venture established in 2007 between Reliance and Paramount, currently manages around 40 channels, including popular ones like MTV, Nickelodeon, Colors (a Hindi-language channel), and the JioCinema streaming service. This conglomerate has been in fierce competition with Disney’s Star business in India, acquired in 2019 as part of Disney’s purchase of Rupert Murdoch’s Fox empire.
Reliance’s victory over Disney in acquiring streaming rights for the India Premier League cricket tournament in 2022 dealt a blow to Disney’s Hotstar streaming service, resulting in a significant decline in subscribers. Additionally, Star Sports channels, owned by Disney, reported decreases in both subscribers and advertisers in the 12 months leading to September 2023.
Disney CEO Bob Iger expressed confidence in the joint venture, highlighting the synergy between Disney’s brand and Reliance’s profound understanding of the Indian market. Despite the deal valuing Star India at less than a third of its 2019 valuation, Disney will retain a 37% stake in the joint venture, holding exclusive distribution rights for its films and productions in India. Viacom18 will have a 47% share, while Reliance will hold the remaining 16%.
India has become a pivotal battleground for streaming services, with significant players like Netflix and Amazon investing heavily to secure a foothold in this rapidly expanding market. Nita Ambani, wife of Mukesh Ambani, is set to serve as the chairperson of the newly formed company, further solidifying the collaboration’s leadership.
