CCI Clears Merger of Reliance and Disney Media Assets to Form Largest Empire

The Competition Commission of India (CCI) has approved the merger of media assets between Reliance Industries and The Walt Disney Co, creating India's largest media empire valued at over Rs 70,000 crore. This deal, announced six months ago, underwent scrutiny by the anti-trust regulator. Approval was granted after both parties proposed modifications to the original transaction structure.

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In a post on X, the regulator confirmed it had cleared the proposed combination involving Reliance Industries Limited, Viacom18 Media Private Limited, Digital18 Media Limited, Star India Private Limited, and Star Television Productions Limited. This approval is subject to compliance with voluntary modifications. However, CCI did not disclose the specific changes made to the original deal.

Stake Distribution and Leadership

Under this agreement, Mukesh Ambani-led Reliance Industries Ltd (RIL) and its affiliates will hold 63.16% of the combined entity. The Walt Disney will retain a 36.84% stake in the new entity, which will become India's largest media house. Nita Ambani will lead the joint venture as Chairperson, while Uday Shankar, a former top Disney executive, will serve as Vice Chairperson.

Reliance Industries has committed to investing nearly Rs 11,500 crore into this joint venture. This investment aims to strengthen its position against competitors like Japan's Sony and Netflix. The deal also requires approval from the National Company Law Tribunal (NCLT).

Regulatory Scrutiny and Market Impact

The CCI raised several queries regarding the deal, particularly concerning cricket broadcasting rights and OTT presence amid anti-competitive concerns. According to regulations, CCI must pass a prima facie order within 30 days of being notified about the merger. However, it can conduct an in-depth inquiry to identify potential anti-competitive issues, which would involve wider public consultation.

Merger activities in the fast-growing media and entertainment sector are gaining momentum amid consolidation trends aimed at maintaining financial health. Earlier this year, a highly anticipated merger between Sony and Zee failed due to multiple issues. On Tuesday, both companies announced that their dispute had been settled amicably.

Existing Media Ventures

Reliance's media ventures are currently housed in Network 18, which owns TV18 news channels and various entertainment channels under the Colors brand. NW18 also has stakes in moneycontrol.com and bookmyshow and publishes magazines. Its subsidiary NW18 owns news channels CNBC/CNNNews. Additionally, Reliance owns JioStudios for movie production and holds majority stakes in cable distribution companies Den and Hathway.

Disney + Hotstar launched in India in 2020 after acquiring entertainment assets from 21st Century Fox for USD 71.3 billion. This acquisition included operations of Star India and Hotstar, which feature channels like StarPlus and StarGold as well as sports channels like Star Sports.

Streaming Rights Battle

Disney + Hotstar initially grew its subscriber base rapidly with streaming rights for cricket matches such as IPL and World Cup. However, it lost the bid for digital streaming rights for the 2023-27 cycle to Reliance-backed Viacom18. Viacom18 won this bid for USD 720 billion, which is 12.92% higher than what Star India had paid on average per match value.

The newly formed entity will house two streaming services and 120 television channels. Viacom18 is part of the RIL group, while SIPL is wholly owned by The Walt Disney Company. STPL is indirectly owned by The Walt Disney through incorporation in the British Virgin Islands.

This merger marks a significant shift in India's media landscape as companies consolidate to stay competitive in a rapidly evolving market environment.