The prospect of a merger between the media and entertainment operations of Reliance Industries Ltd (RIL) and Walt Disney Co’s India business has taken a significant step forward. Last week, the companies signed a non-binding term sheet in London, paving the way for a stock-and-cash deal that would result in RIL owning a 51% stake in the combined entity. The merger, subject to regulatory approvals, is expected to be finalized by February next year.
As part of the deal, RIL is expected to establish a new subsidiary, incorporating Disney’s Star India through a share swap arrangement. JioCinema, RIL’s OTT app, will also be included in the merger. The agreement involves an immediate capital investment of approximately $1-1.5 billion.
The board of the new entity is slated to have equal representation from both companies, with at least two directors from each side. Uday Shankar, the second-largest shareholder in Viacom18, is expected to secure a board seat for Bodhi Tree.
Disney’s foray into the Indian market intensified after acquiring 21st Century Fox’s entertainment assets in 2019. However, recent setbacks, including losing the streaming rights for the Indian Premier League (IPL) and discontinuing streaming HBO content, have impacted Disney+Hotstar. The merger with RIL aims to bolster both entities in the competitive Indian OTT market, combining the strengths of JioCinema and Disney+Hotstar to attract a broader user base.