Disney Strikes $8.5bn Deal to Merge India Business with Reliance Industries
In a groundbreaking move, Disney has announced an $8.5 billion deal to merge its India business with Reliance Industries, a move that will significantly reduce the US entertainment giant’s financial exposure in one of the world’s most populous countries. The deal comes as Disney’s India venture has been struggling to turn a profit, prompting CEO Bob Iger to reevaluate the company’s strategy in the country.
Under the terms of the agreement, entities controlled by Reliance, the Indian conglomerate led by billionaire Mukesh Ambani, will invest $1.4 billion and hold a 63 percent stake in the new company, while Disney will retain a 37 percent stake. The newly formed entity is valued at $8.5 billion, according to the companies.
Disney’s foray into the Indian market began in 2019 when it acquired Star India as part of its massive $71 billion acquisition of Fox from media mogul Rupert Murdoch. At the time, Star India was seen as one of the most promising assets in Murdoch’s portfolio. However, the business has since become a financial burden for Disney, prompting Iger to explore alternative options for the company’s presence in India.
The India sports business, in particular, has been a major source of losses for Disney and is expected to continue losing money for the foreseeable future. This, coupled with losses in its US streaming unit and the decline of its traditional television business, has put pressure on Disney to reassess its strategy in India.
One major setback for Disney came last year when it lost the rights to stream the popular IPL cricket tournament from 2023-2027. The streaming rights were secured by JioCinema, a joint venture between Reliance Industries and Viacom18, led by James Murdoch and former Disney India chief Uday Shankar. While Disney retained the broadcast TV rights, the loss of streaming rights was a significant blow, as many Indian cricket fans prefer to watch matches on their mobile phones.
The deal with Reliance Industries highlights the challenges that global media companies face in penetrating India’s film-loving yet price-conscious market. Despite its massive population, India’s annual subscriber revenue remains relatively low. This merger follows the collapse of an agreement between Sony and India’s Zee Entertainment earlier this year, which would have created a $10 billion media powerhouse to rival Reliance and Disney’s new entity.
Bob Iger acknowledged Reliance’s deep understanding of the Indian market and its consumers, stating that the partnership would create one of the country’s leading media companies. The new entity will be chaired by Nita Ambani, Mukesh Ambani’s wife, who recently stepped down from Reliance’s board to focus on the family’s charitable and cultural projects. Uday Shankar, former Disney India chief and director at Viacom18, will serve as vice-chair.
Industry experts view this merger as a disruptive move that will consolidate the advertising market share in Indian television and streaming. The merged group is expected to control approximately 40 percent of the market, giving them an almost monopolistic position. Karan Taurani, a media analyst at Elara Capital, described the deal as “very disruptive” and believes it will have a significant impact on the industry.
Overall, Disney’s decision to merge its India business with Reliance Industries marks a strategic move to mitigate financial losses and tap into Reliance’s deep understanding of the Indian market. With the formation of this new entity, both companies aim to create one of India’s leading media companies that can rival traditional television in terms of reach and viewership.
