India Business Merger Deal With Reliance Is ‘Best Of Both Worlds’: Disney CEO

Days after Reliance and Walt Disney Company’s India arm announced the merger of their media businesses, the CEO of the US-based entertainment giant, Bob Iger, said the deal is “the best of both worlds”.

Speaking during a Morgan Stanley investor conference, Iger said Disney wanted to stay in India and the deal with Reliance not only benefits the company in terms of the bottom line but also de-risks it in the country.

“We made a big investment in India when we purchased the assets of 21st Century Fox. We’re one of the biggest media companies in India. But even though it’s the most populous country in the world, and we felt we want to be there because of that, we also know that there are challenges in that market,” said Iger.

“And we had an opportunity to align with Reliance, which is obviously the company that has done very well there and one that we respect. And in doing so, end up owning part of a bigger media company,” he said. “And we believe that, that not only should benefit us in terms of the bottom-line, but derisk us as well there.”

On February 28, Reliance Industries Limited (RIL), Viacom 18 Media Private Limited (Viacom18), and The Walt Disney Company announced signing binding agreements to set up a joint venture (JV) that would combine the businesses of Viacom18 and Star India Private Limited.

The deal values the JV at $8.5 Bn. After the deal completion, the JV will be controlled by RIL, which would own 16.34%, while Viacom18 and Disney would hold 46.82% and 36.84% stakes, respectively.

The merged entity will have more than 100 TV channels and two leading OTT platforms – Disney+ Hotstar and JioCinema. It is expected to give a tough competition to global OTT players like Amazon Prime and Netflix.

“It’s kind of the best of both worlds. We stay in the market at a significant level. We have a very good partner in Reliance, and we get to have a chance of growing a business and lowering the risk of doing so,” Iger added.

Following the announcement of the deal, brokerage Bernstein said it is positive for Disney and would help the US-based company focus on its core growth markets while keeping an option as a passive investor in the largest but also challenging market.

On the other hand, Kotak Institutional Equities said that the consolidation would play an important role in making RIL a dominant player in the Indian media space. 

“RIL and Disney bring together a formidable combination of capital, content library, tech know-how, talent and distribution. This JV has the potential to compete with Netflix and Amazon Prime Video in India,” the brokerage said.