Reliance Industries, Disney start antitrust diligence on media merger: Report

Mukesh Ambani-controlled Reliance Industries and New York Stock Exchange-listed Walt Disney have reportedly appointed law firms and started antitrust due diligence of their planned mega media and entertainment merger, Reuters reported quoting top sources.

As per the report, Reliance has appointed law firm Khaitan & Co and Shardul Amarchand Mangaldas, while Disney has roped in AZB & Partners.

The appointments are the latest update in the Reliance and Disney merger, which would bring together two streaming services and 120 television channels and create an entertainment superpower.  

Last week, Reliance Industries and Walt Disney signed a non-binding term sheet to merge their Indian media operations, the Economic Times reported.

Senior Disney executives from Burbank headquarters and top Reliance officials from Mumbai travelled to London in late December and signed the non-binding term sheet on the deal.
 
Reliance-owned Viacom18 will establish a step-down subsidiary absorbing a significant portion of Star India's stock, resulting in a 51%:49% shareholding pattern. Reliance will own 51% and Disney 49% in the merged Indian media company, the report said.  

Jio Cinema will also be included in the merger, with Reliance anticipated to retain a major stake and pay cash for controlling stock in the merged entity.

Reliance and Disney are expected to finalise the significant entertainment and media merger in India by February 2024.

Antitrust experts have told Reuters that a key area of antitrust scrutiny for a Disney-Reliance merger would be their streaming businesses and their power over advertising during cricket.

Disney Hotstar app still owns the rights for International Cricket Council's matches in India until 2027, while Reliance's JioCinema app has the rights for IPL.

Earlier in December, Network18 Media & Investments Ltd and TV18 Broadcast announced a consolidation of their TV and digital news businesses.

In July 2023, Walt Disney CEO Bob Iger had hinted toward selling the linear assets of the company citing challenges faced by them.

Star has come to Disney's fold after the acquisition of the entertainment assets of 21st Century Fox in 2019. The Indian business has been struggling for the last few years.

According to the latest filing from Star India, its consolidated net profit for FY23 has dropped 31% to Rs 1,272 crore. Its income had increased by 9 per cent to Rs 20,699 crore.

Earlier this year, the RIL-controlled media house had disrupted by live streaming the IPL matches through its OTT platform JioCinema.

Network18 Media & Investments Ltd and TV18 Broadcast declared the consolidation of their TV and digital news businesses in early December. In July 2023, Bob Iger, the CEO of Walt Disney, hinted at selling the company's linear assets due to challenges. Star joined Disney after the 2019 acquisition of 21st Century Fox's entertainment assets.

However, Star's Indian business has been struggling in recent years. As per Star India's latest filing, its net profit for FY23 fell by 31% to Rs 1,272 crore, even as its income saw a 9% increase to Rs 20,699 crore.

The mega-merger is coming around the same time when media house Zee Entertainment is trying to close a merger with Culver Max Entertainment (earlier known as Sony Pictures Networks India).

The merger was earlier planned to take place by the end of 2023 but the $10 billion deal is yet to be finalised due to several hindrances and legal tangles.

The merger agreement, which was finalised in 2021, was to be sealed by September 2023. Later, it was pushed to December 22, 2023. The fate of the merger is still uncertain with some industry insiders predicting the merger to finally happen by February 2024.