The recent merger between Reliance Industries Ltd. and The Walt Disney Company’s Indian media assets has created a formidable new player in the global entertainment landscape. This $8.5 billion joint venture (JV), which combines the media businesses of both giants, is set to reshape the streaming and television sector in India. With at least 100 channels and two major digital streaming platforms under its umbrella, this merger is poised to have significant implications for the industry both domestically and internationally.
The JV will merge Reliance’s Viacom18 with Disney’s Star India, resulting in a powerful conglomerate that includes leading TV channels like Colors, StarPlus, StarGOLD, Star Sports, and Sports18, as well as popular streaming apps JioCinema and Disney+ Hotstar. The new entity will be controlled by Reliance, which will hold 16.34% of the JV, while Viacom18 will own 46.82% and Disney will retain 36.84%. The merger also includes an investment of Rs 11,500 crore ($1.4 billion) by Reliance for future growth. Nita Ambani will chair the JV, with Uday Shankar, a former Disney India chief and current Bodhi Tree Systems co-founder, serving as Vice Chairperson.
Shifting the Dynamics in the Indian Market
The merger comes at a time when Disney’s presence in India has been waning. The company’s valuation of Star India dropped to around $4 billion, impacted by its loss of the Indian Premier League (IPL) digital rights to JioCinema. Additionally, Disney+ Hotstar has seen a significant drop of 23 million subscribers. On the other hand, Viacom18 has strengthened its position by acquiring several properties previously held by Disney, including IPL digital rights and HBO content.
This strategic merger allows Disney to conserve cash and dilute its holding to raise capital, aligning with its broader strategy of navigating turbulent global markets. The consolidation is part of Disney’s ongoing efforts to manage high cash burns associated with sports broadcasting rights and other expenditures.
Global Context and Competition
In a global context, the merger positions the new entity as a significant competitor on the world stage. With a combined FY23 revenue of Rs 25,000 crore, the JV will command a 40% market share in both linear TV and OTT sectors in India. This positions it as a formidable force against other major players in the industry, such as Netflix and Amazon Prime Video.
Globally, the streaming market is dominated by a few key players. Netflix, for instance, remains a leader in content production and distribution, with a diverse and expansive library. Amazon Prime Video, another major competitor, leverages its integration with Amazon’s e-commerce ecosystem to drive its streaming service. Disney+ has been expanding aggressively, leveraging its acquisition of 21st Century Fox to build a robust portfolio.
The newly formed JV’s combination of JioCinema and Disney+ Hotstar, along with a vast library of content including more than 30,000 Disney assets, creates a compelling offering. It has the potential to rival the global giants, particularly in the Indian market, where local content and sports rights are crucial.
Impact on the Indian Entertainment Landscape
The merger is set to redefine the competitive landscape of Indian media and entertainment. The new JV will have a commanding presence in sports broadcasting, with rights valued at nearly Rs 55,000 crore for major cricket properties over the next four to five years. This dominance in cricket, a sport with massive viewership and advertising revenue potential in India, will give the merged entity an estimated 80-90% share of cricket advertising revenues.
The consolidation also brings together a diverse array of content, which will likely enhance the consumer experience. Uday Sodhi, former head of SonyLIV, notes that the addition of Disney content to JioCinema’s existing library, which includes HBO and NBC Universal content, will create a richer offering for viewers. This could compel competitors like Netflix and Amazon Prime Video to elevate their content and service quality to maintain their market positions.
Regulatory Scrutiny and Market Reaction
The merger's scale and market impact could attract scrutiny from the Competition Commission of India (CCI). With a substantial market share in both linear TV and OTT sectors, the JV’s influence on market competition will be closely watched. The consolidation of media assets under a single entity may raise concerns about market monopolization and its effects on consumer choice and pricing.
In a broader perspective, this merger is the second major consolidation in the Indian media and entertainment sector following the failed Zee-Sony merger, which was announced in September 2021 but ultimately fell through. The Reliance-Disney merger, however, appears more promising, given the strategic alignment and substantial investment involved.
The merger between Reliance Industries and The Walt Disney Company’s Indian media assets marks a transformative moment in the entertainment industry. By creating a new media behemoth with extensive television and digital streaming assets, the JV is set to enhance competition and reshape the media landscape in India. As the global and local streaming markets continue to evolve, this consolidation will likely have far-reaching effects on content distribution, competitive dynamics, and consumer choices in the entertainment sector.
(Source:www.businesstoday.in)
The JV will merge Reliance’s Viacom18 with Disney’s Star India, resulting in a powerful conglomerate that includes leading TV channels like Colors, StarPlus, StarGOLD, Star Sports, and Sports18, as well as popular streaming apps JioCinema and Disney+ Hotstar. The new entity will be controlled by Reliance, which will hold 16.34% of the JV, while Viacom18 will own 46.82% and Disney will retain 36.84%. The merger also includes an investment of Rs 11,500 crore ($1.4 billion) by Reliance for future growth. Nita Ambani will chair the JV, with Uday Shankar, a former Disney India chief and current Bodhi Tree Systems co-founder, serving as Vice Chairperson.
Shifting the Dynamics in the Indian Market
The merger comes at a time when Disney’s presence in India has been waning. The company’s valuation of Star India dropped to around $4 billion, impacted by its loss of the Indian Premier League (IPL) digital rights to JioCinema. Additionally, Disney+ Hotstar has seen a significant drop of 23 million subscribers. On the other hand, Viacom18 has strengthened its position by acquiring several properties previously held by Disney, including IPL digital rights and HBO content.
This strategic merger allows Disney to conserve cash and dilute its holding to raise capital, aligning with its broader strategy of navigating turbulent global markets. The consolidation is part of Disney’s ongoing efforts to manage high cash burns associated with sports broadcasting rights and other expenditures.
Global Context and Competition
In a global context, the merger positions the new entity as a significant competitor on the world stage. With a combined FY23 revenue of Rs 25,000 crore, the JV will command a 40% market share in both linear TV and OTT sectors in India. This positions it as a formidable force against other major players in the industry, such as Netflix and Amazon Prime Video.
Globally, the streaming market is dominated by a few key players. Netflix, for instance, remains a leader in content production and distribution, with a diverse and expansive library. Amazon Prime Video, another major competitor, leverages its integration with Amazon’s e-commerce ecosystem to drive its streaming service. Disney+ has been expanding aggressively, leveraging its acquisition of 21st Century Fox to build a robust portfolio.
The newly formed JV’s combination of JioCinema and Disney+ Hotstar, along with a vast library of content including more than 30,000 Disney assets, creates a compelling offering. It has the potential to rival the global giants, particularly in the Indian market, where local content and sports rights are crucial.
Impact on the Indian Entertainment Landscape
The merger is set to redefine the competitive landscape of Indian media and entertainment. The new JV will have a commanding presence in sports broadcasting, with rights valued at nearly Rs 55,000 crore for major cricket properties over the next four to five years. This dominance in cricket, a sport with massive viewership and advertising revenue potential in India, will give the merged entity an estimated 80-90% share of cricket advertising revenues.
The consolidation also brings together a diverse array of content, which will likely enhance the consumer experience. Uday Sodhi, former head of SonyLIV, notes that the addition of Disney content to JioCinema’s existing library, which includes HBO and NBC Universal content, will create a richer offering for viewers. This could compel competitors like Netflix and Amazon Prime Video to elevate their content and service quality to maintain their market positions.
Regulatory Scrutiny and Market Reaction
The merger's scale and market impact could attract scrutiny from the Competition Commission of India (CCI). With a substantial market share in both linear TV and OTT sectors, the JV’s influence on market competition will be closely watched. The consolidation of media assets under a single entity may raise concerns about market monopolization and its effects on consumer choice and pricing.
In a broader perspective, this merger is the second major consolidation in the Indian media and entertainment sector following the failed Zee-Sony merger, which was announced in September 2021 but ultimately fell through. The Reliance-Disney merger, however, appears more promising, given the strategic alignment and substantial investment involved.
The merger between Reliance Industries and The Walt Disney Company’s Indian media assets marks a transformative moment in the entertainment industry. By creating a new media behemoth with extensive television and digital streaming assets, the JV is set to enhance competition and reshape the media landscape in India. As the global and local streaming markets continue to evolve, this consolidation will likely have far-reaching effects on content distribution, competitive dynamics, and consumer choices in the entertainment sector.
(Source:www.businesstoday.in)