Reliance Industries Ltd and The Walt Disney Company yesterday formally announced a decision to merge their Indian television and streaming assets that would, subject to regulatory approvals, create an entertainment behemoth valued at US$ 8.5 billion. Disney will provide content licenses to the joint venture.

Former Disney Asia chief and a partner (along with James Murdoch and others) in Bodhi Tree investment firm, Uday Shankar, will be the vice chairperson of the merged entity. RIL CMD Mukesh Ambani’s wife Nita Ambani will be the chairperson.

Disney may also contribute certain additional media assets to the JV, subject to regulatory and third-party approvals, a joint press release from all involved companies stated. However, how the valuation of the merged entity was arrived at has not been disclosed.

Reliance Industries Limited, Viacom 18 Media Private Limited (a Reliance and Paramount JV where RIL is a majority stakeholder), and The Walt Disney Company yesterday said binding definitive agreements have been signed to form a joint venture that will combine the businesses of Viacom18 and Star India.

As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private Limited through a court-approved scheme of arrangement.

According to details made available, Reliance will invest Rs. 11,500 crore in the joint venture. After regulatory approvals, the JV will be controlled by RIL (16.34 percent), while 46.82 percent will be owned by Viacom18 and 36.84 percent by Disney.

Speaking about the JV, RIL CMD Mukesh Ambani, said, “This is a landmark agreement that heralds a new era in the Indian entertainment industry. We have always respected Disney as the best media group globally and are very excited at forming this strategic joint venture that will help us pool our extensive resources, creative prowess and market insights to deliver unparalleled content at affordable prices to audiences across the nation.”

The JV will seek to lead the digital transformation of the media and entertainment industry in India and offer consumers high-quality and comprehensive content offerings anytime and anywhere.

The combination of the media expertise, cutting-edge technology and diverse content libraries of Viacom18 and Star India will allow the JV to offer more appealing domestic and global entertainment content and sports live streaming services, while delivering an innovative and convenient digital entertainment experience at affordable prices, the companies said.

The JV will also be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets, providing a full suite of entertainment options for the Indian consumer, the official statement added.

Bob Iger, CEO of The Walt Disney Company, said, “Reliance has a deep understanding of the Indian market and consumer, and together we will create one of the country’s leading media companies, allowing us to better serve consumers with a broad portfolio of digital services and entertainment and sports content.”

According to the vice-chair designate Shankar, Co-founder of Bodhi Tree Systems, “We are privileged to be enhancing our relationship with Reliance to now also include Disney, a global leader in media  and entertainment. This joint venture is poised to shape the future of entertainment in India and accelerate the Hon’ble Prime Minister’s vision of making Digital India a global exemplar.”

The transaction, also subject to shareholders’ approval, is expected to be completed in the last quarter of calendar year 2024 or first quarter of calendar year 2025.

Bodhi Tree Systems is a strategic investor in consumer technology opportunities in Southeast Asia, with a particular focus on India. It has made investments in Viacom18.

Bodhi Tree, a platform of James Murdoch’s Lupa Systems and Shankar, was established in 2021 to explore and invest in Southeast Asia and the Middle East. Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, is an investor in Bodhi Tree Systems.

Commenting on the merger, Karan Taurani of Elara Capitals said, “The ad revenue potential from IPL is expected to increase significantly with the merged entity having exclusive rights (TV+Digital) to IPL. This consolidation may result in bundled advertisement revenues, potentially mitigating the higher cost of IPL rights and reducing overall losses; due to IPL rights being split between TV and digital between two different platforms and digital platform offering IPL free, there was a big dent in the IPL revenues on TV, which could see some respite.”

Taurani added: “The merger is anticipated to bring about restructuring in employee costs, reduced production expenses and lower advertisement costs for TV. These potential cost synergies could contribute to improved margins for the merged entity. On the sports side too, content costs may pare sharply for TV, digital over the medium to long term, given that fewer platforms may bid aggressively for expensive properties.”