Disney And Reliance Clinch Joint Venture In India (original) (raw)

Disney and Reliance have announced an anticipated deal in India to merge their respective digital streaming and television assets, creating “a world class leader across entertainment and sports,” the companies said today.

Disney anticipates up to $2.4 billion in charges for the March quarter, reflecting a write-down of the net assets of Star India, and of removing the assets from its entertainment linear networks ahead of the deal closing with the business now classified for accounting purposes as what’s called “held-for-sale.”

The transaction values the JV at ₹70,352 crore ($8.5 billion), excluding synergies. Disney will hold about 37% of the venture, which combine the businesses of Mumbai-based Reliance Industries, its owned and controlled Viacom 18 Media, and Star India. As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private.

Disney will provide content (the JV will have exclusive rights to distribute Disney films and productions in India, with a license to 30,000+ Disney content assets) and may also contribute certain additional media assets, subject to regulatory and third-party approvals.

Watch on Deadline

Nita Ambani will be the Chairperson of the JV, Uday Shankar vice chair, providing strategic guidance to the JV.

The JV will bring together assets across entertainment (Colors, StarPlus, StarGOLD) and sports (Star Sports and Sports18) including events across television and digital platforms through JioCinema and Hotstar. The JV will have over 750 million viewers across India and will also cater to the global Indian diaspora.

The announcement said the JV will seek to lead the digital transformation of the media and entertainment industry in India with a “combination of the media expertise, cutting-edge technology and diverse content libraries of Viacom18 and Star India.”

“India is the world’s most populous market, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company,” said Disney CEO Bob Iger. “Reliance has a deep understanding of the Indian market and consumer, and together we will create one of the country’s leading media companies, allowing us to better serve consumers with a broad portfolio of digital services and entertainment and sports content.”

Reliance chair and managing director Mukesh Ambani called the JV “a landmark agreement that heralds a new era in the Indian entertainment industry. We have always respected Disney as the best media group globally and are very excited at forming this strategic joint venture that will help us pool our extensive resources, creative prowess, and market insights to deliver unparalleled content at affordable prices to audiences across the nation. We welcome Disney as a key partner of Reliance group.”

The transaction, which has been the subject of speculation for months, is expected to close in late 2024 or early 2025. Disney said in an SEC filing today that, pending the close, Star India will be classified as “held-for-sale.”

As a result, Disney said it expects to record a non-cash pre-tax impairment charges of 1.8billionto1.8 billion to 1.8billionto2.4 billion in the current quarter (its fiscal second quarter), approximately half of which reflects a write-down of the net assets of Star India, in order to adjust them to fair value (less estimated transaction costs). The other half reflects a write-down of goodwill at the entertainment linear networks reporting unit, reflecting the impact of removing Star India.

Disney said it will continue to adjust the net book value of Star India to fair value until the closing date.

Reliance is India’s largest private sector company with assets spanning oil and gas exploration, refining and marketing, petrochemicals, renewables, retail and digital services.

The news comes with Disney in the midst of a bitter proxy fight with two activist investors. Trian Group’s Nelson Peltz and Blackwells Capital are both fielding board candidates ahead of Disney’s April 3 annual meeting.