Disney to merge India media operations with Reliance

The Walt Disney Co. will merge its India unit with Mukesh Ambani’s conglomerate Reliance Industries, as the Indian billionaire seeks to dominate the entertainment industry in the world’s most populous nation.

The two companies said in a statement  that Reliance and its subsidiaries will own 63.16% of the venture, which is valued at $8.5 billion. Disney will own the rest.

Reliance also will infuse $1.4 billion into the venture, which will become India’s largest television company.

Disney accounts for about 25% of television viewership in India, said Vivekanand Subbaraman, a research analyst at investment company Ambit. In its annual report, Reliance put its share at 12%. The comparable figure for their closest competitor, Zee Entertainment, is 17%, according to the company, and 8% at Sony, according to Subbaraman.

Ambani called the merger a “landmark agreement that heralds a new era in the Indian entertainment industry” and said it will help Reliance “deliver unparalleled content at affordable prices to audiences across the nation.”

Disney CEO Bob Iger said the merger will help “create long-term value for the company.”

“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,” he said.

The deal comes as Reliance looks to expand its entertainment business — hoping that a bigger market share brings higher advertising revenues — while Disney explores ways to cut $5.5 billion in costs in the next few years.

In recent years, Reliance has outbid both Sony and Disney for the broadcast rights to popular cricket tournaments. In 2022, it clinched the streaming rights for the Indian Premier League for $3 billion. It spent $731 million last year for broadcasting and streaming rights for the national cricket team’s matches.

Another display of Ambani’s bullishness on broadcasting came last year when Reliance increased its commitment to Viacom18, its entertainment unit, by six times to $1.3 billion after a key investor, James Murdoch’s Bodhi Tree, cut its proposed investment from $1.78 billion to $528 million.

Reliance also paid Warner Bros. about $120 million last year for Indian streaming rights of the network’s shows and announced 100 new shows and films without specifying a time frame for their release.

The challenges in India were highlighted by Iger during an analyst call in November. Iger said while the TV segment in India “does quite well … we know that other parts of that business are challenged for us and for others,” referring to streaming. Disney’s streaming app lost 20 million paying users in the year to September 2023 after the company lost its bid for the rights to IPL cricket.

Ambani’s push for market supremacy follows a decline in Indian TV ad revenue from 320 billion rupees ($3.86 billion) in 2019 to 318 billion rupees in 2022, according to EY, a financial consultancy. TV subscription revenue slumped 16% during this period to 392 billion rupees.

In the fight for digital advertising, the market shares of streaming services are only expected to rise to 8% in 2025 from 6% in 2022, EY estimated.