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India's top conglomerate Reliance Industries and Walt Disney on Wednesday announced the merger of their India TV and streaming media assets, creating an $8.5 billion entertainment juggernaut far ahead of rivals in the world's most populous nation.
Reliance, led by Asia's richest man Mukesh Ambani, will inject $1.4 billion in the merged entity, with the company and its affiliates holding a more than 63% stake. Disney will hold about 37%, the companies said in a joint statement.
For Disney, the merger follows its long-drawn struggle to arrest a user exodus from its bleeding India streaming business and financial strain caused by billions of dollars in Indian cricket rights payments, in another example how foreign businesses can struggle to grow in India.
The merger values the India business of the U.S. entertainment giant at just around a quarter of the $15 billion valuation when Disney acquired it as part of its Fox deal in 2019, sources have said.
The companies said the transaction values the merged venture at around $8.5 billion on a post-money basis. They did not explain how they arrived at such valuation.
Together, the Reliance-Disney merged entity will have 120 TV channels and two streaming platforms, helping Ambani eclipse rivals such as Japan's Sony, India's Zee Entertainment and Netflix in the country's $28 billion media and entertainment sector.
Reliance said Nita Ambani, wife of Reliance boss Mukesh Ambani, would chair the board of the combined entity, and former top Disney executive Uday Shankar would serve as vice chair.
"The JV will be one of the leading TV and digital streaming platforms for entertainment and sports content in India, bringing together iconic media assets across entertainment," the companies said in a joint statement.
The deal comes when Disney is facing pressure globally to streamline its businesses. Bob Iger returned as Disney chief executive in November 2022, less than a year after he retired, and has since restructured the company to make the business more cost effective.
Still, Disney is up against activist billionaire investor Nelson Peltz who is pushing the home of Mickey Mouse to cut costs, create a profitable streaming business globally, improve the performance of its movie studio, and clean up its succession planning.
Iger in November said the company would like to stay in India, but it was considering its options.
"Reliance has a deep understanding of the Indian market and consumer," Iger said in the statement on Wednesday, adding the deal will allow "us to better serve consumers with a broad portfolio of digital services and entertainment and sports."
(Reporting by Aditya Kalra in New Delhi; Editing by Kirsten Donovan, Alex Richardson and Tomasz Janowski)