Mukesh Ambani's Reliance to acquire over 50 percent stake in Disney India

Reliance Industries Limited (RIL), headed by billionaire Mukesh Ambani, is poised to secure a majority stake of over 50 percent in Disney India as part of the upcoming extensive merger between the two media giants. The acquisition is anticipated to encompass approximately 51-54 percent of the company, placing the valuation of Disney's domestic business at $3.5 billion. The valuation of Disney has undergone a substantial decline due to the impending merger, previously estimated to be in the range of $15-$16 billion before the deal.

While RIL is expected to pick up around 51 percent stake in Disney India, around 9 percent will be acquired by Bodhi Tree, a joint venture between James Murdoch and former top Disney executive, Uday Shankar. Disney will hold around 40 percent stake in the merged entity. Disney's TV and streaming business in India has struggled over the years, with its digital platform facing a user exodus in stiff competition over cricket streaming with Ambani's platform. Disney Plus and Jio Cinemas have been battling it out for the exclusive streaming rights for Indian cricket matches, with Hotstar's viewership taking a major hit due to the same.

This agreement will enhance Reliance's dominance in India's $28 billion media and entertainment sector, particularly following the recent failure of the $10 billion merger between Japan's Sony and India's Zee Entertainment. The anticipated deal between Reliance and Disney is set to be formalized in February 2024, establishing the largest media and streaming entity in India upon completion of the merger. Nevertheless, a specific date for the finalization has not been disclosed at this time.

Engaged in discussions for several months, Reliance and Disney, both possessing streaming services and a combined total of 120 television channels, are on the verge of establishing an entertainment powerhouse in the world's most populous nation. The mega-merger between Reliance and Disney aims to construct the largest media entity in the country. As part of this agreement, Viacom18, the broadcast division of Mukesh Ambani's Reliance Industries, will undergo a merger with Disney's India businesses.

While the ultimate percentage of stake may undergo adjustments, it is anticipated that Reliance and its subsidiaries will secure a 50 percent stake, with Disney holding approximately 40 percent. Sources reveal that the discussions for the deal are at an advanced stage, with some ongoing resolution of tax-related issues, although the broad outlines are nearly finalized. The proposed merger between Disney and Reliance could encounter significant antitrust challenges due to the substantial market influence they might wield, particularly given the proximity of a merged entity involving Sony and Zee in India. The notable decline in the valuation of Disney India is partially attributed to the collapse of the Zee-Sony merger, leading to Zee Entertainment withdrawing from a $1.4 billion deal. There are indications that Disney is contemplating legal action against ZEEL for the termination of the agreement, according to sources.