Disney & Reliance Discussing Indian Business Merger
Over the past few months, there have been many reports of Disney looking into potentially selling off some or all of its Disney Star business in India.
Some new information on the deal has been revealed by Economic Times, which reported that Disney and Reliance industries have been holding talks to merge their Indian businesses. Though no agreement has been made but the deal is being finalised, with a term sheet being prepared, with Reliance having a 51% stake and Disney having the other 49%.
The deal would see Reliance create a step-down subsidiary of RIL’s Viacom18, which would absorb Disney Star through a share swap. The two companies are getting ready to
This merger would create one of the biggest entertainment businesses in the region, giving some serious competition to Zee Entertainment, Sony, Netflix and Amazon. Reliance runs a variety of linear channels and a streaming service, JioCinema.
Apparently, the companies can’t agree on the valuations of either business, with Disney valuing their business at around $10 billion, while Reliance values Disney’s business at around $7 billion.
“Disney has expressed interest and Reliance is keen only if there’s a controlling stake. There is no broad agreement right now,”
The two sides are also apparently coming up with a business plan and agreeing to an investment plan, which could be a billion dollars.
Recently, Disney has begun separating Disney+ Hotstar financial numbers away from traditional Disney+ core subscribers, since they make much less per subscriber than in other countries.
This deal is being looked at as a merger, not an acquisition. And this would allow Disney’s assets to be utilised better across the region. It would also allow lots of cost synergies with a merger between the streaming platforms in India.
The plan would be that the Walt Disney Company would then sign a five-year exclusive license with the newly merged joint company, to get access to Disney+ Originals and its library content. This might increase the profits on the US streaming side, which will then just get an income from India each year, rather than the costs of running the platform in India.
Though it might take a hit in how many subscribers Disney+ has globally, it can be counter-balanced by how many subscribers the new joint platform could have and Wall Street would likely look at the deal favourably, since Disney’s Indian business has been struggling since the purchase in 2019.
Disney+ Hotstar has been losing millions of subscribers in India following the loss of the cricket rights to JioCinema and now a potential merger between the two platforms might be likely.
It’s worth noting that nothing has been officially announced and but could possibly be revealed before Christmas or early next year, once the finer details have been worked out.
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Roger Palmer
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