India’s leading conglomerate, Reliance Industries, and global entertainment giant Walt Disney Co. (NYSE: DIS) have reportedly inked a non-binding term sheet to merge their respective Indian media operations. The revelation was made by the Economic Times on Monday, citing undisclosed sources close to the matter.
According to the sources, under the terms of the merger, Reliance is poised to secure a 51% stake through a combination of shares and cash, while Disney would retain the remaining 49%. This strategic arrangement signifies a significant shift in control toward the Reliance group, helmed by Indian billionaire Mukesh Ambani. The anticipated completion date for the deal is set for February, with Reliance expressing its intent to conclude the process by the end of January, contingent upon obtaining regulatory approvals.
This development comes on the heels of a Reuters report two weeks ago, which disclosed that executives from both companies were engaged in discussions in London to chart the next course of action for the media merger.
If successfully finalized, the merger promises to create one of India’s largest entertainment conglomerates, pitting itself against established players like Zee Entertainment, Sony, as well as streaming giants Netflix and Amazon Prime.
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Reliance’s media and entertainment unit, Viacom18, currently operates numerous TV channels and the JioCinema streaming app. The conglomerate, led by Ambani, has been embroiled in a competitive rivalry with Disney, marked by Reliance’s strategic move of offering free streaming of the Indian Premier League cricket tournament, previously under Disney’s digital rights in India. This has triggered a notable exodus of users from Disney’s streaming app Hotstar in recent quarters.
Sources suggest that the proposed merger aims to consolidate Reliance’s Viacom18 unit, taking control of Star India through a stock swap. The Economic Times reports that the parties are contemplating a substantial investment in the range of $1 billion to $1.5 billion for the business, although it remains unclear whether this figure represents the total investment or the individual contributions from each entity.
The governance structure of the merged entity is expected to feature an equal number of directors from both Reliance and Disney, with a minimum of two representatives each. Additionally, there is consideration for the inclusion of at least two independent directors, although this aspect is subject to potential adjustments in the coming weeks, according to the report.
Information for this story was found via Reuters and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
