Disney strikes $8.5bn deal to merge India business with Reliance Industries

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Disney has struck an $8.5bn dollar deal to merge its India business with Reliance Industries, in a move that will reduce the US entertainment group’s financial exposure to what has been a lossmaking venture in one of the world’s most populated countries.

Entities controlled by Reliance, the Indian conglomerate run by billionaire Mukesh Ambani, will invest $1.4bn and take a 63 per cent stake in the new company, while Disney will hold 37 per cent. The new entity is valued at $8.5bn, the companies said on Wednesday.

Disney acquired Star India in 2019 as part of its blockbuster $71bn acquisition of Fox from Rupert Murdoch. At the time, Disney viewed Star India as one of the most promising businesses in Murdoch’s portfolio.

However the India business has instead become a financial drag, leading chief executive Bob Iger to weigh his options in the country, part of a wide-ranging review of Disney’s strategy as it faces pressure from activist investors. Internal debate within Disney swirled on whether to leave India entirely.

Disney’s India sports business is expected to lose money for years to come, a prospect that was difficult for the company as it also faced losses in its US streaming unit and the long-term decline of its traditional television business.

Disney suffered a major setback last year when it lost the rights to stream the popular IPL cricket tournament from 2023-27, in a record $6.2bn auction. The streaming rights are crucial because many Indian cricket fans watch matches on their mobile phones instead of traditional TV.

While Disney kept the broadcast TV rights, the streaming rights went to JioCinema — a joint venture between Reliance Industries and Viacom18, run by James Murdoch and former Disney India chief Uday Shankar.

Disney’s joint venture with Reliance underscores the difficulties global media groups face in cracking India’s film-loving but price-conscious market, where annual subscriber revenue remains low.

The deal follows the collapse of an agreement between Sony and India’s Zee Entertainment earlier this year, which would have created a $10bn media powerhouse to rival Reliance and Disney’s new entity.

Iger acknowledged Reliance’s “deep understanding of the Indian market and consumer” and said Disney and the conglomerate would “create one of the country’s leading media companies”.

Ambani’s wife Nita — who recently stepped down from Reliance’s board and is now focused on the family’s charitable and cultural projects — was appointed chair of the new entity, while Shankar was made vice-chair.

Shankar, a director at Viacom18 who poached multiple colleagues from Disney, told the Financial Times last year that his aim was to create a digital platform that could rival the spread and viewership of television in India.

Karan Taurani, a Mumbai-based media analyst at Elara Capital, called the deal “very disruptive” with the merged group to control about 40 per cent of advertising market share in Indian television and streaming — an “almost monopolistic” position.

Additional reporting by John Reed

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