Reliance-Disney merger gets CCI approval

The Competition Commission of India has approved the country's largest media and entertainment merger, valued at $8.5 billion, between Reliance Industries and Disney's Indian media assets. The joint venture, boasting extensive content libraries and robust distribution channels, will compete with major players such as Sony, Netflix, and Amazon, as well as 120 TV channels.

Following the announcement, RIL shares opened at ₹3,006.20, are currently trading at ₹3,007.90, and reached a high of ₹3,016.85 in morning trade, reflecting a 1% increase from the previous close of ₹2,996.60 on the NSE.

"Commission approves the proposed combination involving Reliance Industries Limited (RIL), Viacom18 Media Private Limited (Viacom18), Digital18 Media Limited, Star India Private Limited (SIPL) and Star Television Productions Limited (STPL), subject to the compliance of voluntary modifications," said the statement released on August 28 evening by the CCI.

The proposed combination will merge the entertainment businesses of Viacom18, part of the RIL group, with SIPL, which is fully owned by The Walt Disney Company (TWDC), the American entertainment multinational. Following the transaction, SIPL will become a joint venture owned by RIL, Viacom18, and existing TWDC subsidiaries.

Reliance Industries, Viacom18, and The Walt Disney Company announced their agreement to merge the businesses of Viacom18 and Star India into a joint venture (JV) on February 28 this year. The post-money valuation of the joint venture is pegged at ₹70,352 crore (approximately $8.5 billion), excluding synergies, with the RIL investing ₹11,500 crore (around $1.4 billion) into the venture as part of the deal, to support its growth strategy.

As per the merger agreement, the JV would be controlled by RIL, with ownership stakes of 16.34% for RIL, 46.82% for Viacom18, and 36.84% for Disney. Nita Ambani would become the Chairperson of the JV, with Uday Shankar, former chairman of Star India as Vice Chairperson, providing strategic guidance.

With the creation of a major entertainment conglomerate with a vast viewership base, the potential for a dominant player to emerge in the cricket broadcasting space remains a major concern. Currently, Disney-Star holds exclusive digital and TV rights for ICC events from 2024 to 2027, as well as IPL broadcasting rights from 2023 to 2028. Meanwhile, Jio has acquired the IPL digital streaming rights, creating a competitive landscape for sports broadcasting in the country.

As a result, the CCI approval requires the entities to comply with certain modifications. The detailed order from the CCI, which is yet to be released, will outline the specific adjustments needed for the merger to proceed.

The decision came a day before the 47th annual shareholders' meeting (AGM) of Reliance Industries, scheduled to be held today, August 29.