Disney has taken another big step towards realigning its India strategy. The company has signed a non-binding term sheet with Reliance Industries to merge their Indian operations, which would create one of India's largest entertainment empires. The news was first reported by the Economic Times.
Under the terms, Indian billionaire Mukesh Ambani's Reliance Group would own 51% of the combined company through a combination of shares and cash. Disney would hold the remaining 49% stake.
The term sheet was finalized last week at a meeting in London where Bob Iger adviser Kevin Mayer represented Disney and Ambani adviser Manoj Modi represented Reliance. According to the Economic Times, the duo have been working on the same line for months.
The merger deal is expected to be completed in February, although Reliance reportedly hopes to complete it by the end of January.
Iger, who has cut thousands of jobs this year and is facing pressure from activist investor Nelson Peltz, said in the earnings call last month that Disney would like to stay in India but would seek to “strengthen our hand and the bottom line.” improve”.
Hotstar, the streaming company originally founded by Star India, came under Disney's control as part of its $71.3 billion acquisition of 21st Century Fox assets in 2019. Disney has leveraged the star assets in a variety of ways to reach its goal of 300 million to 350 million in total streaming subscribers by 2024. It integrated Disney+ as a low-cost add-on for Hotstar subscribers, increasing overall Disney+ subscriptions, albeit at lower margins.
Disney+ Hotstar is Disney's largest streaming service in terms of users worldwide, but started losing subscribers after the company sold Indian Premier League cricket (IPL) to the Indian Premier League Cricket (IPL) in a $2.9 billion deal last year Streaming app JioCinema lost. JioCinema is jointly owned by billionaire Ambani's Reliance Jio, Paramount Global and James Murdoch and Uday Shankar's Bodhi Tree Systems.
Disney executives said the studio misjudged Indian consumers' desire to switch from free TV to premium plans.
“We were optimistic about the willingness of Indian subscribers to pay. That didn’t work out,” an inside source told Portal. “Free cricket is the only ball left.”
Disney acquired Hotstar, which already owned IPL rights, as part of its $71 billion acquisition of 21st Century Fox's global assets in 2019. While IPL games were previously offered for free, Disney made them part of the deal in 2020 a paid service.
The Disney-Reliance merger move in India comes as the proposed $10 billion merger between Zee Entertainment Enterprises and the local unit of Sony Group Corp., which would create the largest media merger ever in India, closes after two years still pending.
Dade Hayes contributed to this report.