Disney and Reliance Come to a Final Agreement on India Merger
Mukesh Ambani’s Reliance Industries and The Walt Disney Company have signed a binding agreement that will see a merger of Reliance and Disney India.
The deal has been in the works for two months and could finally be completed this week. When the dust settles, Reliance will own about 51-54% of the business, while Disney will hold around 40%. The remainder of the company will be owned by Bodhi Tree.
The new merged media entity will hold India’s two biggest streaming services and 120 television channels.
“India is the world’s most populous market, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company,” Disney CEO Bob Iger 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.”
The Value of Disney’s India Assets Has Plummeted
As part of the deal, Disney’s assets were valued at around $3.5B. That number is a sharp decrease from the $16B valuation put on the business in 2016.
The valuation of Disney’s India assets plummeted after Zee Entertainment backed out of a $1.4 billion to acquire cricket linear television rights from Disney.
The new merged operation’s board will be chaired by Nita Ambani, with former Disney India chief Uday Shankar as vice-chairperson.
What’s Next
Now that a team has been consummated, attention will turn to the Competition Commission of India (CCI), the regulatory body that will review the merger.
“The CCI will surely take a close look at the number of channels that the new merged entity holds. It will also likely worry about the company’s preponderance of cricket rights. The CCI would be worried that the “combined entity, due to its strong market presence in streaming, can command their own rates and advertisers will be left without bargaining power,” said Vaibhav Choukse, head of competition law at Indian law firm JSA.
A completed deal is still far from a sure thing. Still, it looks like the merger is continuing to head in the right direction.