Reliance may sign non-binding pact with Disney Star to explore India entertainment biz merger

New Delhi: Billionaire Mukesh Ambani-led Reliance is expected to sign a non-binding agreement with Disney-Star for the merger of the India business of the global entertainment major, according to industry sources.

This will be a combination of cash and stock deal, in which India’s most valuable company would infuse money to have a majority 51 per cent stake in the merged entity, they said.

While, Disney-Star, whose India business consists of a linear network of Star India and other channels and the OTT platform Disney+ Hotstar, would have a minority stake.

When contacted, a Disney-Star spokesperson declined to comment.

If the merger is through, it would create India's one of the largest media houses, which would have over 70 television channels run in eight languages from Star India and around 38 channels from Viacom 18, the step-down firm of RIL.

Besides, this would also have two streaming platforms - Disney+ Hotstar and JioCinema.

No final decision has been made so far as both parties are still negotiating. After signing the agreement, both sides would go for due diligence, the industry sources informed.

The move will help Reliance Industries Ltd (RIL) expand into the media business. Earlier this week, Network18 Media & Investments Ltd and TV18 Broadcast announced a consolidation of their TV and digital news businesses.

Earlier in July this year, Walt Disney CEO Bob Iger hinted at selling the linear assets of the company citing challenges faced by them.

Star has come to Disney's fold after the acquisition of the entertainment assets of 21st Century Fox in 2019. The Indian business has been struggling for the last few years.

According to the latest filing from Star India, its consolidated net profit for FY23 has dropped 31 per cent to Rs 1,272 crore. Its income had increased by 9 per cent to Rs 20,699 crore.

Novi Digital Entertainment, which owns OTT platform Disney+ Hotstar reported a widening of its loss to Rs 748 crore, while its revenue was up 35 per cent to Rs 4,331 crore.

Earlier, in September Viacom18 bagged streaming and broadcast rights for all domestic and international cricket in India for five years from September 2023 to March 2028 for a consideration of Rs 5,963 crore.

The RIL-controlled media house earlier this year disrupted the streaming business by live-streaming IPL matches through its OTT platform JioCinema.

India's leading media house Zee Entertainment, which has announced a merger with rival Culver Max Entertainment (earlier Sony Pictures Networks India), has a deadline of December 21. If this goes through, then it would be the leading media & entertainment firm in the country.

According to Karan Taurani SVP of Elara capital: "We believe the above move will lead to consolidation at both ends (TV and OTT) of the M&E (Media and Entertainment) industry; with high likelihood of Z/Sony merger too going through, both these media giants - Sony/Reliance will command a potential market share of 65%/40% on TV/OTT put together."