Reliance and Disney recently inked a deal to merge their TV and streaming assets, creating a media behemoth with a valuation of $8.5 billion (over ₹70,000 crore). This deal is touted as one of the biggest deals in the media and entertainment industry and is yet to pass through the scrutiny of the fair trade regulator, the Competition Commission of India (CCI).

The combined entity will have 120 TV channels, a massive content library and two large streaming services – Disney+Hotstar and Jio Cinema. It will have over 750 million viewers in India and will also cater to the Indian diaspora across the world. Let’s take a closer look at the deal and how it will change the landscape of India’s media industry.

The Deal- who will effectively control the entity

Reliance Industries, Viacom 18 and the Walt Disney Company have signed definitive agreements to form a joint venture that will combine the businesses of Viacom 18 and Star India. The media undertaking of Viacom 18 will be merged into Star India Pvt. Ltd.

As a part of the deal, Disney will transfer all its India assets and employees, except its 30 percent stake in Tata Play, its consumer products business, and VFX studio Industrial Light & Magic (ILM) — to its wholly owned subsidiary Star India.

Viacom 18, a step-down subsidiary of Reliance Industries will merge with Star India to form a ₹58,852 crore joint venture. Once the deal goes through, Reliance Industries will infuse another ₹11,500 crore of growth capital for a 16.34 percent stake, valuing the joint venture (JV) at ₹70,352 crore.

As of now, Reliance will effectively control the company with its 16.34 percent stake and Viacom 18’s 46.82 percent stake. Disney will own 36.84 percent of the JV. 

Bargaining power of customers, advertisers

The entity will have over 70 channels from Star India, 38 TV channels from Viacom 18 in eight languages and two large OTT platforms — Jio Cinema and Hotstar and two film studios owned by each of them. It will collectively control 75-80 percent of the Indian sports market.

In other words, the combined entity will have a lion’s share of the media and entertainment industry. This is slightly negative for advertisers as the bargaining power of the merged entity will be higher.

Its huge customer base across various genres could lead to a market share loss for smaller players and the possibility of shutting down. Subscription fees in both digital and linear TV may increase due to the entity’s huge market share, leaving customers with very few alternatives.

Will there be a near monopoly in sports broadcasting?

Before the merger, the companies engaged in fierce competition for cricket streaming rights. In 2022, Reliance-backed Jio Cinema clinched these rights. Once it did, it announced the free streaming of the Indian Premier League (IPL). As a result, Indian customers started fleeing Disney’s platform, and it lost more than 11.5 million Indian subscribers, a loss that is big enough for any company to bear.

In March 2023, Warner Bros moved its content including shows like The Game of Thrones and Succession to Jio Cinema. Soon, Disney started merger talks with Reliance.

The combined entity would have exclusive digital and broadcast rights to some of the key sporting events including the next four years of the IPL, flagship ICC events, domestic Indian cricket, the Pro Kabaddi League, the FIFA World Cup, Premier League, and Wimbledon. The entity is expected to command a market share of anywhere between 75-80 percent.

A single 10-second slot for advertisement during a cricket match can cost companies as much as ₹24 lakh. A comparable slot during a football match is around ₹2.4 lakh. This could bring in significant revenue for the joint venture.

In Closing

India has a $28 billion media and entertainment sector. The joint venture will compete with Sony, Zee Entertainment, Amazon Prime Videos and Netflix.

The joint venture is subject to regulatory approvals, including the CCI’s approval. With such a huge market share, the CCI might take a while to evaluate the joint venture. In fact, the entity might be asked to divest or shut a few channels in the interest of consumers and the market. The transaction is expected to be completed in 2025, and it aims to reshape the Indian media and entertainment industry.