Walt Disney and Indian conglomerate Reliance are set to merge their Indian operations, as announced by the U.S. entertainment giant on Wednesday.
The merger will see the integration of their respective Star India and Viacom18 units into the newly formed Star India joint venture, with an estimated value of approximately $8.5 billion post-money, excluding synergies. This strategic move aims to capitalize on the vast Indian market, boasting over 750 million viewers, according to a statement released by the companies.
However, the completion of the transaction is contingent upon regulatory, shareholder, and customary approvals. The anticipated timeline for the deal’s finalization is either the last quarter of this year or the first quarter of 2025.
Upon completion, Reliance, led by Mukesh Ambani, Asia’s wealthiest individual, will assume control of the joint venture and invest $1.4 billion into its growth initiatives. The ownership breakdown will comprise 16.34% for Reliance, 46.82% for Ambani’s Viacom18, and 36.84% for Disney.
Nita Ambani, Mukesh Ambani’s spouse, is slated to chair the joint venture, while Uday Shankar, a member of Viacom18’s board, will serve as vice chairperson.
Walt Disney CEO Bob Iger expressed enthusiasm about the joint venture, highlighting India’s status as the world’s most populous market and the potential for long-term value creation.
In a separate disclosure, Disney revealed expectations of recording non-cash pre-tax impairment charges ranging from $1.8 billion to $2.4 billion in the current quarter. Approximately half of this amount reflects a write-down of Star India’s net assets.
Under the existing merger agreement, Disney will nominate three directors to the joint venture’s board, while RIL will have five seats. Additionally, two independent directors will be appointed.
The move comes amid a competitive landscape in the Indian entertainment industry, with various companies striving to establish a strong foothold in the lucrative market. Despite facing subscriber losses, undergoing a recent overhaul, and implementing a $5.5 billion cost-cutting initiative resulting in a reduction of 7,000 personnel, Disney remains committed to maintaining its presence in India.
“We’re looking in an open-minded way. We like being in business in India; we’d love to be able to strengthen our hand. I can’t, at this point, predict where that will end up,” remarked Iger in an interview with CNBC in November.
