On Wednesday, 28 August 2024, the Competition Commission of India (CCI) finally approved the merger of Disney Star and Viacom18. This merger has been long awaited, as two of the conglomerates are coming together. Disney Star is the domestic unit of The Walt Disney Company while Viacom18 is the media unit primarily held by Reliance Industries. Post this merger, India will get one of the largest media houses which will be worth over ₹ 70000 crore or $8.5 billion. In the entertainment space, mergers of this size are rare and thus this one can create history.
Reliance – Disney Merger Details
As per the agreement signed yesterday, Reliance Industries and its associates will hold 56% of the stakes, while Disney will hold 36.84% of the shares and Bodhi Tree will hold the remaining 7.5% of the stakes. Bodhi Tree is a joint venture of James Murdoch and Uday Shankar, Ex-Star India CEO. The overall value of this joint venture has been determined to be around ₹ 70350 crore on a post-money basis. Reliance Industries, which will be the major stakeholder, will invest ₹ 11500 crore in the venture to grow the newly formed entity. Court-approved arrangement to be followed when Viacom’s media operations will merge into Star India Pvt. Ltd.
Network of Reliance’s Viacom18 & Disney
Currently, Reliance Industries’ Viacom18 has a network of around 40 television channels. On the other hand, Disney Star runs around 80 channels in the country. The merger between the two will offer a media house offering the highest number of networks which is over 120 channels. On top of that, both Viacom18 and Disney Star have TV rights for all kinds of cricket matches. Viacom18 has BCCI’s domestic and international cricket matches TV rights while Disney has rights for IPL, which is valid up to 2027. Another crucial benefit of this merger is that both the media giants have networks in multiple languages, catering to the demands of the people across the country. Reliance’s Jio Cinema along with Disney’s Hotstar can have a library of more than 200000 hours of content, which range from basic television drama to reality shows, web series, movies, sports, and everything that one can imagine in the entertainment space. With the local and ‘Desi’ content, users can enjoy international/ global movies such as Marvel Universe, and National Geographic Documentaries as well.
Why CCI approval was necessary?
With Reliance’s Viacom18 and Disney acquisition, the total market share of this combined entity would surpass 40% of the overall entertainment market, while it can have a monopoly in certain segments as well. This can lead to reduced competition in the industry and may lead to excessive dominance by this entity, which is not healthy for the overall market and the investors. This is why CCI had to intervene and scrutinize the entire deal. The Competition Commission of India approved the Walt Disney and RIL merger post verifying and analyzing all the aspects and the market and added voluntary clauses in the agreement to make the deal a fair one for the entities involved and the other competitors in the industry. However, the clauses added by CCI are yet to be disclosed to the public. Reliance and Disney submitted the papers for the mergers in February. After a long scrutiny process, finally, CCI finally approved the proposal. However, both the companies were confident enough about the CCI’s approval, as it earlier approved Zee and Sony to merge as well (this merger has been canceled now though), obviously following certain guidelines and conditions.
What next after CCI Approval?
As now Reliance and Disney get the nod from the competition watchdog, the next step would be initiating the integration process. Some of the other approvals are pending from the National Company Law Tribunal (NCLT) and Ministry of Information & Broadcasting (MIB), which are expected by mid-September 2024. Once these approvals come, the integration process will begin. Both companies have clearance from their lenders and creditors, which was also a crucial part of the entire procedure.
As the integration process starts, the companies will determine each of the verticals of the business, assess the requirements to develop each of the departments, and segments, and also set up the organizational structure for the entity and select the key managerial personnel (KMP). The list of KMP is already created and the companies are waiting for the other approvals before announcing the names. The merger activities should also not take very long and are expected to be over within a few months.
Wrapping up
This merger & acquisition can turn around the entertainment industry in the country. Mergers of this size have not been recently seen in the market, especially in the entertainment industry. Now all eyes are on NCLT and MIB approvals, and the integration process to kick in.
Source: TheLiveMint
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