Walt Disney and Reliance Industries Sign a Non-Binding Agreement
A non-binding agreement has been signed by Walt Disney and Reliance Industries Limited (RIL) regarding the merger of their Indian media operations. Recently, the two businesses discussed the possibility of forming a joint venture (JV) in which RIL would hold the majority of the shares. Reliance hopes to complete the transaction by the end of January, but it may take until February to receive both commercial and regulatory ratifications.
RIL – Disney’s Non-Binding Agreement
Kevin Mayer, a former Disney executive and current advisor, and Manoj Modi, an Ambani confidante, were present at the meeting and had been negotiating the term sheet for months. The idea is to use a stock swap to merge Star India with a step-down subsidiary of RIL’s Viacom18. With a minimum of 51% ownership, Reliance is anticipated to be the biggest shareholder in the combined business, with Disney holding 49%. JioCinema will be included in the agreement as well. RIL is most likely to purchase the majority interest with cashReliance and Disney are anticipated to complete the major entertainment and media merger in India by February 2024, affecting the nation’s streaming and viewing landscape.
Capital Investment Contributed to the Non-Binding Term Sheet
Following last week’s signing, a valuation exercise will formally begin, and legal advisors will get to work on the specifics. A 45–to 60-day exclusivity period may be possible, and it may be renewed annually. Disney, whose Hotstar streaming app has been losing money, may benefit from the deal. The development comes close to the Zee-Sony merger, with Sony agreeing to discuss an extension of the deal’s deadline. Under the proposed agreement, Reliance’s Viacom18 would establish a unit that would acquire control of Star India through a stock exchange. Additionally, both companies are probably going to contribute cash as capital investments, which should total between $1 and 1.5 billion.
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Benefits for Disney Hotstar
Disney and Reliance are expected to have equal representation on the board. Uday Shanker-led Bodhi Tree, Viacom18’s second-largest shareholder after Reliance, is probably going to be granted a seat. In addition, at least two independent directors are under consideration. Disney’s India division was able to secure the broadcast TV rights for the 2023–2027 Indian Premier League. However, it lost its online rights. JioCinema was granted the right to stream videos online. In recent months, Hotstar, Disney’s streaming app, has seen a decrease in users as a result of this. Disney has been negotiating a sale or joint venture (JV) for its India business. Thias consists of numerous TV channels, since the beginning of this year.
Entering the competitive landscape
In the event of a merger, one of India’s largest entertainment conglomerates would be formed. It will be put up against streaming behemoths like Netflix and Amazon Prime as well as TV producers like Zee Entertainment and Sony. The announcement of the acquisition might come as soon as next month. Disney is expected to maintain a minority stake in the Indian company under the terms of the proposal. This will come after any cash and stock swap transaction is finished
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Reliance Industries to Acquire Disney India in a Cash and Stock Deal
Disney’s India division is about to be acquired by Reliance Industries in a cash and stock deal. Instead of splitting up the company, it has chosen to sell its interests in India to Reliance, its main rival. The success of Reliance Industries’ streaming service Jio Cinema has also had an impact on the U.S. company’s business, according to Reliance Industries owner Mukesh Ambani. Disney has been looking into opportunities for selling or partnering with its India-related properties. Additionally, it had discussions with billionaires Kalanithi Maran, owner of Sun TV Network, and Gautam Adani, as well as Blackstone, a private equity firm.
Disney – Reliance Cash and Stock Deal
Instead of the piecemeal transaction previously considered, the American entertainment behemoth may sell a controlling interest in the Disney Star company, which it values at about $10 billion. Reliance, meanwhile, values the assets at $7 billion to $8 billion. The possibilities that Disney was previously considering included the purchase of all of its assets, including sports rights and regional streaming service Disney+ Hotstar, alone or in combination. Some of Reliance’s media divisions might be combined into Disney Star as early as next month, following the announcement of the deal. Additionally, even after any cash and stock transfer deals are finished, Disney is expected to have a small ownership interest. Disney receives broadcast and streaming rights to the IPL competition, a plethora of multilingual TV channels, and an investment in a Bollywood film production firm as part of the transaction, which is essential to the corporation’s global streaming expansion.
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Disney’s India operations
Star India and the Disney+ Hotstar streaming service make up Disney’s Indian operations. It had the highest user count last year on a global scale. Disney has attempted to turn around the fortunes of its streaming business in India. However, subscriber withdrawals are quickening. Disney is banking that the move will increase advertising revenue. Disney Star has battled with declining subscriber numbers, but the media company has continued to spend and hasn’t given up on the market. Other options for the company have been considered, such as a direct sale or the formation of a joint venture.
Disney subscribers shifting to Jio
Disney’s Hotstar is presently streaming the current cricket World Cup to mobile fans for free in an effort to regain members after losing approximately 20 million subscribers this year. Customers rushed to Jio Cinema since it was a free place to watch IPL games. Nevertheless, Disney has recaptured the world record for on-demand video streaming from Jio Cinema after drawing 35 million concurrent viewers to a cricket match using the Disney streamer app.
Jio Cinema’s rise to popularity
Disney’s streaming activities in India are under increased pressure from Jio Cinema. The negotiations serve as an example of Ambani’s disruption of India’s entertainment sector. It comes after he paid $2.7 billion in 2022 for the streaming rights to the IPL. The cricket event was earlier this year televised for free on the billionaire’s Jio Cinema platform. Then, Reliance achieved another victory when it obtained a multi-year deal to stream HBO programming produced by Warner Bros. Discovery in India. Any potential agreement with Reliance will benefit Viacom18, a joint venture with Paramount Global. Sports has been one of Viacom18’s primary focus areas, and it has developed a strong portfolio there that includes a number of extremely well-liked titles.
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