Executives connected in the subject stated that Reliance Industries Ltd. (RIL) and Walt Disney Co. are finalising the specifics of a non-binding term sheet to proceed with plans to integrate their media and entertainment operations in India. If the merger closes, the Mukesh Ambani-led group will probably have a majority share in what would grow to be the largest media and entertainment company in the nation.
According to the aforementioned sources, the current idea is to establish a step-down subsidiary of RIL’s Viacom18, which will then acquire Star India through a stock swap. According to them, Reliance is vying to hold a larger stake in the combined business—at least 51%—while Disney will own the remaining 49%. Since both companies are seen as being of comparable size, RIL is probably going to have to pay cash for the majority share.
In addition, the two parties are discussing a business plan to provide $1–1.5 billion in cash as an urgent capital commitment. The entity’s ultimate shareholding structure will solidify, and its value will be determined by the total amount of money contributed by all parties.
Disney and Reliance are anticipated to have an equal number of directors on the board—at least two from each company. With a 15.97% interest in Viacom18, Bodhi Tree, helmed by Uday Shankar, is the second-largest shareholder after Reliance and is probably going to be given a seat. We are considering at least two independent directors. Those mentioned above stated that this might alter in the coming weeks.
The US company’s chief financial officer, Justin Warbrooke, as well as the head of international business operations and direct-to-consumer business, Kevin Mayer, a former Disney executive brought back in July by CEO Bob Iger as an adviser to help him manage the company’s legacy television business and the ESPN sports network, are involved in the talks. According to the aforementioned sources, K Madhavan, the head of Disney India, and The Raine Group, an advisory group, are also involved. Warbrooke was recently in India.
Ambani’s principal advisor, Manoj Modi, is leading the RIL negotiations with the group’s M&A group.
A five-year licence for exclusive subscription video on demand (SVOD) material for Disney+ originals and its library content is also anticipated to be given by the US business to the joint venture company.
During a November earnings call, Walt Disney CEO Iger stated that while the business was “considering options,” it would prefer to remain in India in order to “strengthen our hand, improve the bottom line.”
The FY23 net profit of Viacom18, which is also owned by TV18 and Paramount, dropped 98% to Rs 11 crore, despite an increase in operating revenue of 10% to Rs 4,554 crore. The company spent Rs 4,586 crore, a 33% rise in expenses.
Disney estimated the operations’ worth at the time to be $10 billion.
