Disney and Reliance Industries announce media mega deal in India

The Walt Disney Company on Wednesday announced a joint venture with India's largest conglomerate, Reliance Industries, in an $8.5 billion deal that will create a media powerhouse in the world's most populous country and end Disney's decades-long solo effort to gain a foothold in the market. .

Reliance Industries, owned by Mukesh Ambani, India's richest man, will be Disney's senior partner in the deal. With a market capitalization of $239 billion and the rights to the hugely popular Indian Premier League cricket matches, Reliance is a juggernaut in the media landscape in India.

Disney and Reliance already had a market share of around 40 to 45 percent in advertising and the same share of streaming, giving them a big edge over rivals, said Karan Dourani, research analyst at Elara Capital.

“This will lead to better profitability in both TV and streaming because content costs will come down,” Mr. Dourani said.

As part of the deal, Disney will merge its Indian operations with Viacom18, a division of Reliance Industries. Reliance and Viacom18 will hold 63 percent of the new venture Disney 37 percent, institutions said in a statement. Reliance will pay $1.4 billion to consolidate its control.

Chairman of the joint venture Mr. Ambani's wife Nida M. Ambani will be there; Uday Shankar, former chairman of Disney India, will be the vice-chairman.

“Reliance has a deep understanding of the Indian market and consumer,” said Disney chief executive Robert A. Iger said in a statement. “We are excited for the opportunities this joint venture offers to create long-term value.”

Disney is one of the largest companies in the world, valued at $200 billion; But in India, it has no relevance for the domestic hero.

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Disney first came to India, now a nation of 1.4 billion potential media consumers, in 1993 to find a distributor to air some of its content.

With India's market, Disney's ambitions grew. Last year, accounting and consulting firm EY estimated India's media landscape to be worth $30 billion this year and $100 billion by 2030.

Disney's adventures in India peaked in 2019 when it acquired 21st Century Fox from the Murdoch family's News Corporation, among Fox's properties, Disney won the TV and streaming rights for Indian Premier League cricket matches.

Large subscriber numbers followed, but at great cost. At its pandemic-fueled peak, Disney+ had 162 million subscribers in India, but lost almost $500 million in tracking viewers worldwide. By the summer of 2022, its global operations were worth more than $11 billion since its acquisition of Fox and the launch of Disney+.

That's when Disney ran into trouble. Reliance Industries snapped up the cricket rights in 2022 for nearly $3 billion. While Disney lost 11.5 million Indian subscribers in a short period of time, it gained 800,000 new subscribers in the rest of the world.

However, Disney has not given up on India.

“India is an important market for the company and one of the strongest growth markets internationally, and we are committed to ensuring a strong presence there,” Disney executives said in an email to employees on Wednesday.

In 1958 Mr. When Reliance was started by Ambani's father, it was mainly a polyester fiber trading store. It grew into petrochemicals and now operates the world's largest oil refinery at the port of Jamnagar on India's far west coast. Along the way, it entered telecom and other businesses, and in 2016 launched Jio, a low-cost mobile network that soon became the world's third largest.

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JioCinema, part of the growing family of Jio properties but a relatively small platform when India's streaming wars began, is likely to become the new home for Disney's content in India. At one point, another contender seemed poised to emerge as Japanese media giant Sony sought to expand its operations in India by buying Zee Entertainment.

With Zee, India's first private cable-TV company, Sony would have been big enough to split the TV and digital market with Reliance and Disney. But Sony backed out of its deal with Zee on January 22, frustrated by the founding family's insistence on maintaining control.

Sony's breakup with Zee made things even more difficult for Disney. For one thing, Zee is still indebted to Disney for the Cricket license. Bloomberg reported The estimated value of Disney's India unit has dropped from $10 billion to $4.5 billion. Sony's failed merger ultimately led to Mr. Disney's deal. It turned out sweet for Ambani: if a landscape was defined by two giants, it was likely to be dominated by just one.

Being such a sprawling conglomerate, Reliance has an advantage in the battle for media dominance. Direct payment does not require content. If their subscribers are brought into their retail, telecom and credit operations, the cost of programming seems small compared to the combined revenue.

Brooks Barnes Contributed reporting from Los Angeles.

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