Mumbai-based Reliance Industries Ltd (RIL) and Walt Disney Co. are in the final stages of formalizing a non-binding term sheet to progress with their intentions of merging their media and entertainment operations in India, Economic Times quoted sources familiar with the matter. If successfully completed, the deal is poised to grant the Mukesh Ambani-led conglomerate a commanding stake in what would emerge as the nation’s largest media and entertainment enterprise.
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The current proposal involves the establishment of a subordinate entity under RIL’s Viacom18, which will assimilate Star India through a stock exchange. RIL aims to secure majority ownership, holding at least 51 per cent in the amalgamated company, with Disney retaining the remaining 49 per cent. Both entities are regarded as comparable in size, suggesting that RIL is likely to make a cash payment for the controlling interest, ET reported.
Negotiations are underway to devise a business plan for an immediate cash injection, anticipated to range between $1-1.5 billion. The ultimate ownership structure and valuation of the entity will be determined based on the financial contributions from each party.
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As per ET reported, the board is expected to feature an equal representation of at least two directors each from Reliance and Disney. Bodhi Tree, led by Uday Shankar and the second-largest stakeholder in Viacom18 after Reliance, is expected to secure a seat. The inclusion of a minimum of two independent directors is under consideration and may undergo alterations in the coming weeks, according to the sources.
Manoj Modi, a key adviser to Mukesh Ambani, is leading negotiations for RIL, supported by the conglomerate’s M&A team.
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In addition to the merger, the US company is anticipated to grant the joint venture a five-year license for exclusive subscription video-on-demand (SVOD) content encompassing Disney+ originals and its library content. A five-year lock-in agreement, except in the case of an IPO for the merged company, is also anticipated. The joint venture is expected to gain access to distribution channels and Jio Platforms on mutually agreed terms, with a delineation of prohibited engagements with competitors to be established.
