On 30 August, the National Company Law Tribunal, or NCLT, gave its nod of approval to the proposed merger of Walt Disney-owned Star India and reliance-owned Viacom-18 Network. This development came a mere few days after the Competition Corporation of India had approved the deal.
Largest media network
The resultant entity of this merger will be the largest media network in India, with a value of over INR 70,000 crores or $8.5 billion. The combined entity will have a significant share of OTT space as the parties currently hold OTT giants JioCinema and Hotstar, which are slated to merge into one platform with JioCinema absorbing Hotstar. In addition to that, they also hold about 120 TV channels. Combined, they hold a significant grip over the broadcasting market of cricket tournaments like IPL and ICC events. Together, the combined entity is estimated to have at least a 30 to 35% market share in both TV and digital space.
NCLT order
The NCLT bench comprising technical member Anu Jagmohan Singh and judicial member Kishore Vemulapalli issued a 22-page order. “From the material on record, the scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy”, the order read. With this it now appears smooth sailing for the parties to finalize the deal.
Shareholding and composition of the new entity
For the agreements of the deal in the new entity, Reliance will hold a 63.16% stake, while the remaining 36.84% will be held by Walt Disney. The joint venture will be headed by Neeta Ambani, while Uday Shankar is slated to be the Vice Chairperson.
Reaction of these stakeholders
Reliance Chairman Mukesh Ambani was very enthusiastic about the future of the joint venture, saying that it will usher in a new era in India’s entertainment industry. He said that after Jio and the retail business, the reliance ecosystem now wants to make strides in the media business also.
Reliance Industries will also invest an additional INR 11,500 crores in the joint venture for its development. Both conglomerates are confident that the deal will be formalized by October.
What’s next for the giant media house
The proposed entity has its fair share of challenges ahead of it. The Indian media market is constantly changing, and the new entity will have to adapt accordingly. Besides that, it also faces stringent competition from other media giants like Netflix and Sony, which recently cancelled its own ambitious merger with Zee.
It will be very interesting to see how things shape up in the future and whether this deal could be the ultimate game changer many believe it to be. Only time can tell the answer.
About the Author
Shivji Ramakrishna is an avid finance enthusiast and also a prolific writer. He is currently in final year of B. Tech at IIT Roorkee. His areas of interest are diverse from markets to economy to banking.
