CCI Approves Rs 70,350-crore Reliance-Disney Merger

The Competition Commission of India (CCI) has approved a groundbreaking merger between Reliance Industries-controlled Viacom18 and Disney Star, the Indian arm of The Walt Disney Company. This approval ushers in the formation of India's largest media conglomerate, valued at an impressive Rs 70,350 crore ($8.5 billion).

Announced six months prior, the merger underwent rigorous examination by India’s anti-trust regulator, the CCI. The approval was granted on Wednesday, contingent upon the adherence to certain modifications suggested by the merging entities to the original transaction plan.

Here's an in-depth look at the transaction details and the implications of this merger.

Details of the Transaction Structure

Ownership Structure Investment

Under Mukesh Ambani's stewardship, Reliance Industries, along with its affiliates, will hold a 63.16% stake in the new venture, with Walt Disney owning 36.84%. This partnership not only solidifies their dominance in the Indian market but also positions them as a formidable competitor against international giants like Sony and Netflix. This is bolstered by Reliance Industries’ strategic investment of ~Rs 11,500 crore, enhancing its capabilities in the competitive broadcasting and streaming domains.

Strategic Rights and Holdings

The merged entity secures significant content rights, including exclusive digital and TV rights for ICC events from 2024 to 2027 and IPL broadcast rights from 2023 to 2028. Jio, a Reliance affiliate, has also acquired streaming rights for the IPL, marking a significant boost to their media services.

Regulatory Milestones and Management Structure

The CCI's approval aligns with the strategic timing of Reliance Industries' 47th Annual General Meeting (AGM) on August 29, setting the stage for the upcoming shareholder meeting.

The governance structure of the new entity will feature a diverse board comprising 10 members: 5 nominated by Reliance Industries, 3 by Disney, and 2 independent directors.

Nita Ambani is set to lead as the Chairperson of the newly merged entity. Joining her is Uday Shankar, a former Walt Disney executive, who will serve as the Vice Chairperson, ensuring a blend of strong leadership and innovative vision in steering the company forward.

The Way Forward

With regulatory approvals in place, the integration process is expected to commence swiftly, with final approvals from the National Company Law Tribunal (NCLT) and the Ministry of Information & Broadcasting (MIB) anticipated by September 15. The companies are aiming to start the integration phase by October, with the merger projected to finalize between the last quarter of 2024 and the first quarter of 2025.

Post-Merger Outlook: A New Media Landscape

The new entity will merge a vast array of media assets, spanning entertainment and sports. This includes TV channels like Colors, Star Plus, Star Gold, Star Sports, and Sports18, as well as streaming content on platforms such as JioCinema and Hotstar, potentially reaching over 750 million viewers across India.

The merger will also see the joint entity holding exclusive rights to distribute Disney films and utilize over 30,000 Disney content assets in India. The unified media powerhouse will manage over 100 TV channels—70 under Disney and the remainder under Viacom18.

This strategic amalgamation positions the entity to reshape the media landscape, potentially impacting traditional TV networks through shifts in advertising revenue and viewer preferences.

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