Indian billionaire Mukesh Ambani has signed a binding agreement with Walt Disney Co. to combine the two companies' operations in India to create an $8.5 billion media giant that will become one of the world's fastest growing media companies. It has secured a dominant position in one of the growing entertainment markets.
Mr. Ambani's oil and communications conglomerate Reliance Industries will control more than 60% of the new unit (16% directly and 47% through its majority-owned Viacom18 Media Private business). , 37% will be transferred to Disney, the companies said in a joint statement released late Wednesday.
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Reliance plans to invest an additional 115 billion rupees ($1.4 billion) in the new unit to fund growth, and Disney may contribute certain additional assets, subject to regulatory approval. The joint venture, which creates the largest player in the local broadcast and digital space, will have exclusive rights to distribute Disney films and productions in India and license over 30,000 Disney content assets.
The binding agreement, reported by Bloomberg on February 25, will strengthen Reliance's position in Asia's largest entertainment market, especially after the rival merger between Japan's Sony Group and G Entertainment Enterprises collapsed last month. It became something to be secured. Disney initially aimed to significantly increase the valuation of its Indian unit in merger talks, but the final agreement reflects Ambani's influence in a situation the US giant was struggling to navigate on its own. are doing.
Pulkit Chawla, sector analyst at MK Global Financial Services, said in a report on Thursday that Disney's 2019 acquisition of 21st Century Fox, which was estimated to be worth up to $17 billion, “overall “This valuation reflects a significant decline in Disney's valuation.” “However, this deal will hurt other industry players like Zee as they will have to compete with larger companies.”
In Mumbai markets, Reliance shares rose as much as 1.6 per cent during trade, the highest level in two weeks, while Zee fell as much as 2.9 per cent. Other local media stocks also fell on Thursday.
Intense competition and fragmented viewing habits (for example, demand for regional language content) will prevent foreign streaming platforms such as Netflix and Amazon.com's Prime Video from achieving the success they have in other markets. It has become difficult.
Streaming possibilities
The deal is a major boost for Reliance's streaming platform, GeoCinema, as it will now be able to offer Disney Star India's content library in addition to its traditional sports broadcast lineup.
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Reliance and Disney are rivals, with the Indian company outpacing the American company for the rights to the $6.2 billion cricket giant Indian Premier League in 2022. Viacom18 Media also successfully acquired the multi-year rights to his HBO show for Warner Bros. Discovery. inheritance, dragon house and the last of us Last year in particular, it partnered with Disney in India.
Nita Ambani will serve as the joint venture's chairman and Uday Shankar will serve as its vice chairman, the statement said.
Bloomberg Intelligence analyst Geetha Ranganathan wrote in a Dec. 12 memo that the merger “could result in significant cost savings and improve Disney's bottom line.”
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