Reliance Industries, led by billionaire Mukesh Ambani, is nearing a significant merger that could reshape the Indian media landscape. Sources at the WSJ revealed that Reliance is set to merge its India media business with Walt Disney, acquiring a controlling 51%-54% stake.

This deal values Disney’s Indian operations at $3.5bn, a figure significantly lower than the $15-$16bn estimated during Disney’s acquisition of Fox in 2017.

According to reports from the WSJ, Reliance-backed Viacom18 has clinched an agreement to acquire a substantial 60% of Disney’s India unit. This move paves the way for the Indian conglomerate to establish a formidable $10bn media giant in the South Asian market.

The valuation of Disney’s India unit reflects the challenges faced by its TV and streaming business in the country. Intense competition in the cricket streaming sector, particularly from Ambani’s platforms, has contributed to a user exodus from Disney’s digital platform.

This merger holds strategic significance for Reliance, reinforcing its position in India’s lucrative $28bn media and entertainment market. The development follows the recent collapse of a separate $10bn merger deal between Japan’s Sony and India’s Zee Entertainment.

Bodhi Tree, a joint venture between James Murdoch and former Disney executive Uday Shankar, is also reportedly in talks to secure a stake of approximately 9% in the newly merged entity, with Disney retaining around 40%.

Under the proposed deal, Viacom18, the broadcast division of Reliance Industries, will merge with Disney’s India businesses. Talks are still ongoing. If negotiations proceed as anticipated, the deal could be finalized by mid-February.

Despite India’s vast population and growing income levels, Disney has faced challenges in monetising its operations in the region.

Disney’s misjudgment of Indians’ willingness to pay became apparent as Reliance-backed Viacom18 gained popularity, securing five-year rights to stream Indian Premier League (IPL) cricket matches for approximately $3bn.

Disney’s streaming service experienced a significant loss of subscribers between October 2022 and August 2023, coinciding with Ambani’s offer of free cricket on his platform after outbidding Disney for the IPL cricket tournament rights.

In response, Disney has shifted its strategy, now offering free cricket on smartphones in the hope of boosting advertising revenue and mitigating the impact of subscriber losses.

According to GlobalData, subscription video-on-demand service revenue in India is expected to grow at a compound annual growth rate of 15.5% from $1.3bn in 2021 to $2.7bn in 2026.

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By GlobalData