Reliance and Disney may announce merger this week
Reliance Industries and the Walt Disney Company are set to make a groundbreaking announcement this week, as they have signed a binding agreement to merge Viacom18 and Star India. The merger will establish India's largest media empire, encompassing TV broadcasting, streaming, movies, and sports. The combined revenue of the two media giants reached a staggering Rs. 25,000 crore in FY23.
Merger to involve changes in ownership and valuations
The Economic Times reported that Reliance may own 61% of the proposed combined company, while Disney would hold 33% and Bodhi Tree Systems the remaining 6%. Although Disney's Star India is larger, its valuation has dipped to around $4 billion due to expected losses in its sports business. Viacom18 is also valued at approximately $4 billion after Reliance and Bodhi Tree invested over Rs. 15,000 crore into the company in April last year.
Investment and leadership will also be affected by the merger
It is reported that Reliance is likely to invest $1-2 billion, with a large part of the investment being utilized to infuse funds into the merged entity and a part going into the buyout of Paramount's stake. Disney is anticipated to reduce its India exposure by diluting its stake in the merged entity. Uday Shankar, promoter of Bodhi Tree along with James Murdoch, is expected to lead the combined company.
Market dominance might attract regulatory scrutiny
The Star-Viacom18 merger will create a powerhouse in the TV broadcasting industry, boasting over 100 TV channels such as Star Plus, Colors, and Star Sports. Additionally, it will control two streaming platforms, Disney+ Hotstar and JioCinema, holding dominant market shares in subscription and advertising video-on-demand segments. Legal experts predict that the Competition Commission of India will closely examine the merger deal due to the proposed merged entity's market share of over 40% in both TV and streaming.
