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Walt Disney Co. on Wednesday announced a joint venture with India’s largest conglomerate, Reliance Industries, in an $8.5 billion deal that will create a media powerhouse in the world’s most populous country and expand Disney’s decades-long foothold in the market. Will end the single effort of the era. ,
Reliance Industries, owned by India’s richest man Mukesh Ambani, will be Disney’s senior partner in the deal. With a market capitalization of $239 billion and the rights to the hugely popular Indian Premier League cricket matches, Reliance is a giant in the media landscape in India.
Karan Taurani, a research analyst at Elara Capital, said Disney and Reliance already had a combined market share of about 40 to 45 percent in advertising and about the same share in streaming, giving them a big edge over competitors.
“This will lead to better profitability as content costs can be reduced across both TV and streaming,” Mr Taurani said.
As part of the deal, Disney will merge its Indian operations with Viacom18, a part of Reliance Industries. Reliance and Viacom18 will each own 63 percent of the new venture, and disney 37 percent, the companies said in a statement. Reliance will pay $1.4 billion to strengthen its control.
Mr Ambani’s wife Nita M. Ambani will chair the joint venture; The vice president will be Uday Shankar, former president of Disney India.
“Reliance has a deep understanding of the Indian market and consumer,” Disney Chief Executive Officer Robert A. Iger said in a statement. “We are excited for the opportunities this joint venture will provide to create long-term value.”
Disney is one of the largest companies in the world, worth $200 billion; However, in India, it proved to be no match for the homegrown hero.
Disney first came to India, now a country of 1.4 billion potential media consumers, in 1993 and found a distributor to air some of its content.
Disney’s ambitions grew along with the Indian market. Last year, accounting and consulting firm EY estimated India’s media landscape to be worth $30 billion this year and $100 billion by 2030. And Disney is counting on it to bring in millions of subscribers for its streaming services.
Disney’s adventure in India peaked in 2019, when it bought 21st Century Fox from the Murdoch family’s News Corp. Among Fox’s assets, Disney won the TV and streaming rights to Indian Premier League cricket matches.
This was followed by a large number of customers, but at a high cost. At the peak of the pandemic, Disney+ had 162 million subscribers in India, but it was losing about $500 million worldwide in search of viewers. By summer 2022, its global operations had lost more than $11 billion since the purchase of Fox and the launch of Disney+.
That’s when Disney got into trouble. Reliance Industries snatched the cricket rights in 2022 for about $3 billion. Disney lost 11.5 million Indian customers in a short period of time, while it gained 800,000 new customers in the rest of the world.
Still, Disney is not abandoning India.
“India remains a key market for the company and one of the strongest international growth markets for scale, and we are committed to ensuring a strong presence there,” Disney executives said in an email to employees on Wednesday.
When Mr Ambani’s father started Reliance in 1958, it was a trading shop, primarily of polyester fibres. It evolved into petrochemicals and now runs the world’s largest oil refinery at the port of Jamnagar on a remote part of India’s west coast. Additionally, it became involved in telecommunications and other businesses, and in 2016 launched a low-cost mobile network, Jio, which soon became the world’s third largest network.
JioCinema, part of the growing family of Jio properties but a relatively small platform when the streaming wars began in India, is likely to become the new home for Disney’s content in India. At one point, another rival looked set to emerge, as Japanese media giant Sony was looking to expand its operations in India by purchasing Zee Entertainment.
With Zee, India’s first private cable-TV company, Sony would have become big enough to split the TV and digital market with Reliance and Disney. But frustrated by the founding family’s insistence on retaining control, Sony backed out of its deal with Zee on January 22.
It seems that Sony’s breakup with Zee has made things even more difficult for Disney. For one thing, Zee is still indebted to Disney for the Cricket licensing. Bloomberg reported that the estimated value of Disney’s India unit has declined from $10 billion to $4.5 billion. Sony’s failed merger ultimately made the Disney deal even sweeter for Mr. Ambani: The landscape that would have been defined by two giants is instead looking likely to be dominated by just one.
Being such a huge conglomerate, Reliance has an advantage in the battle for media dominance. It doesn’t require content to directly pay for itself. When their customers are brought in across their retail, telecommunications and credit operations, the cost of producing the show seems small compared to the combined revenues.
brooks barnes Contributed reporting from Los Angeles.
