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.
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