Reliance-Disney Merger: RIL Gets Govt Nod To Transfer Channels For $8.5 Billion Deal; Share Price Slumps

Mukesh Ambani-led Reliance Industries Limited (RIL) received the green light from the Ministry of Information and Broadcasting (I&B) on Saturday, September 28, for the transfer of channels ahead of its $8.5 billion merger with Disney. This move paves the way for the creation of one of India's largest media conglomerates.

The I&B Ministry's approval enables the transfer of licenses for non-news and current affairs television channels from Viacom18 Media Pvt Ltd to Star India Pvt Ltd. This step is part of the larger deal, where media channels currently under the banner of Viacom18 will now be housed under Star India's portfolio. This regulatory clearance was announced by Reliance Industries in a formal filing to the stock exchanges.

"It is hereby informed that the Ministry of Information and Broadcasting (I&B), Government of India, vide its order dated September 27, 2024, has granted its approval for the transfer of Licenses relating to Non-News & Current Affairs TV channels held by Viacom18 Media in favour of Star India subject to conditions laid by Competition Commission of India," the regulatory filing stated.

The merger, estimated at $8.5 billion, has already secured approval from the Competition Commission of India (CCI). In August 2024, the CCI gave its nod to the proposed merger between Walt Disney Co.'s local media operations and Reliance Industries' vast conglomerate.

Reliance's Chairman, Mukesh Ambani, emphasized the importance of this merger during the 47th Annual General Meeting (AGM) of RIL, stating, "This marks the beginning of a new era in India's entertainment industry. We are combining content creation with digital streaming."

The merger is seen as a strategic move by Reliance to capitalize on the growing demand for digital content in India and to secure a dominant position in the media sector. This merger further strengthens RIL's already significant presence in broadcasting, streaming, and sports broadcasting rights, including securing the lion's share of cricket broadcast rights.

Once the merger is finalized, Reliance Industries will control over 60% of the combined media entity, with a 16% direct stake and an additional 47% through its Viacom18 Media business. Disney, on the other hand, will retain a 37% stake in the merged entity. Reliance's Viacom18 Media and Digital18 will merge with Disney's Star India and Star Television.

Nita Mukesh Ambani is set to take on the role of chairperson of the merged entity, while Shankar will serve as the vice-chairperson. This leadership duo is expected to steer the new venture to capitalize on emerging trends in content consumption.

The merger will bring together an array of media assets across entertainment, sports, and digital streaming. The combined venture will encompass popular TV channels like Colors, Star Plus, Star Gold, Star Sports, and Sports18, reaching over 750 million viewers nationwide. Additionally, the entity will leverage JioCinema and Hotstar's over-the-top (OTT) platforms.

One of the advantages of the merger is the exclusive rights to distribute Disney films and productions across India. The new media giant will have access to over 30,000 Disney content assets, including globally popular franchises from Marvel and Lucasfilm. The English-language libraries, coupled with content from Warner Bros. Discovery and HBO Originals, position the merged entity to cater to a broad audience.

Moreover, the venture is expected to maintain a strong emphasis on regional languages, including four South Indian languages, Marathi, and Bengali. With sports being another priority, the new entity aims to dominate the sports broadcasting space.

Despite the progress made with the merger, shares of Reliance Industries experienced a dip in trading on the National Stock Exchange (NSE). As of 1:40 pm, Reliance Industries' shares were trading 3% lower at Rs 2,970.25 per share. The stock has delivered impressive returns of over 30% in the past year.