Reliance, Disney Ink Deal For Star-Viacom18 Merger

Reliance Industries and the Walt Disney Company have signed a binding pact to merge Viacom18 and Star India. 

The deal, expected to be announced early this week, has been in progress for over four months and is likely to give rise to India’s largest media empire, encompassing TV broadcasting, streaming, movies and sports.

“The merger deal has finally been signed after months of negotiations. The announcement will happen early this week. It was expected to happen late last week,” a top executive told ET.

Reliance may own a 61% stake in the proposed merged entity, while Disney will hold 33%, leaving Bodhi Tree Systems with the remaining 6%.

Disney’s Star India has seen its valuation drop to roughly $4 Bn, due to anticipated losses in its sports business. Viacom18 was valued at about $4 Bn when Reliance and Bodhi Tree infused over INR 15,000 Cr into the company in April last year. Paramount Global, a shareholder in Viacom18, is set to exit the company with Reliance buying its stake. In the US, the Shari Redstone-promoted company has become an acquisition target.

“Reliance is likely to invest $1-$2 Bn, with a large part of that being deployed to infuse funds into the merged entity and a part going into the buyout of Paramount’s stake,” the report said, quoting sources close to the deal.

Additionally, Disney is expected to reduce its India exposure by diluting its stake in the merged entity. 

Uday Shankar, who is the promoter of Bodhi Tree along with James Murdoch, is expected to lead the merged entity. Currently, Bodhi Tree holds 15.97% of Viacom18, while Paramount owns 13%.

The proposed Star-Viacom18 entity is set to become a major player in the TV broadcasting industry, boasting over 100 TV channels such as Star Plus, Colors, and Star Sports. The entity will also operate two streaming platforms, Disney+ Hotstar and JioCinema, holding significant market shares in subscription and advertising video-on-demand segments.

This combined entity will secure TV and digital rights for major sports properties, including the Indian Premier League, International Cricket Council, cricket boards of India, Australia, and South Africa, PKL, ISL, English Premier League, NBA, and Olympics.

The total investments in the sports business by both the companies are estimated at $10 Bn, with the Indian Premier League accounting for $6 Bn and $3 Bn allocated for ICC rights.

According to legal experts, the Competition Commission of India will review the merger deal, considering the projected market share exceeding 40% in both TV and streaming for the combined entity, Star-Viacom18. The entity will own sports assets, such as the Pro Kabaddi League and the Indian Super League, in a joint venture split 65:35 between Reliance and Disney.

This comes at a time when Disney is said to have reached a preliminary agreement to sell 60% of its Indian media business to Viacom18. The deal is expected to value the overseas operation at $3.9 Bn, less than its 2019 acquisition worth by Disney.

Meanwhile, last month, Zee Entertainment Enterprises notified Disney Star about its decision not to proceed with the $1.4 Bn TV sub-licensing deal for International Cricket Council (ICC) tournaments for the 2024-27 period.

Simultaneously, Sony announced the termination of the $10 Bn merger agreement with Zee. 

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