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May 25, 2024

Reliance Seeks CCI Approval for $8.5 Billion Viacom18-Star India Merger

Reliance Industries, led by billionaire Mukesh Ambani, has approached the Competition Commission of India (CCI) for approval of an $8.5 billion merger between Viacom18 and Star India Pvt Ltd (SIPL). This strategic move aims to consolidate the entertainment ventures of Viacom18, a Reliance Industries Ltd (RIL) entity, with SIPL, which is wholly owned by The Walt Disney Company (TWDC).

The proposed merger will result in SIPL, currently fully owned by TWDC, becoming a joint venture (JV) co-owned by RIL, Viacom18, and TWDC subsidiaries. According to the notice filed with the CCI, Reliance Industries asserts that the transaction will not adversely affect competition in India. To assist the CCI’s evaluation, the notice outlines several key markets with significant horizontal overlaps, including licensing of audiovisual content rights, broadcast TV channel distribution, audiovisual content provision, and advertising space supply in India.

SIPL operates across various media segments such as TV broadcasting, motion pictures, and an over-the-top (OTT) platform. Viacom18’s operations also span TV channel broadcasting, OTT platform management in India and globally, and motion picture production and distribution.

In February, Walt Disney Co and Reliance Industries announced binding agreements to merge their Indian media operations, aiming to create a Rs 70,000 crore ($8.5 billion) media conglomerate. Post-merger, the combined entity will become the largest media and entertainment company in India, boasting over 100 channels in multiple languages, two leading OTT platforms, and a viewer base of 750 million across the nation.

Nita Ambani, wife of Reliance Industries Chairman Mukesh Ambani, will chair the joint venture, with Uday Shankar serving as Vice Chairperson. Reliance and its affiliates will hold a 63.16% stake in the combined entity, while Disney will retain a 36.84% shareholding. Furthermore, Reliance has committed to investing around Rs 11,500 crore into the joint venture to expand the OTT business.

This merger represents a significant step in the evolution of India’s media landscape. The amalgamation of Viacom18’s and SIPL’s assets and capabilities is poised to create a powerhouse in the Indian media and entertainment sector. The combined entity will leverage Viacom18’s extensive broadcasting experience and SIPL’s strong portfolio in TV broadcasting and motion pictures to offer a comprehensive range of entertainment options to consumers.

The strategic alliance is expected to foster innovation and enhance the quality of content delivered to viewers. With Reliance’s substantial investment, the joint venture will focus on expanding its OTT platform, capitalizing on the growing demand for digital content in India. This move aligns with global trends where media consumption is increasingly shifting towards digital platforms.

By creating a joint venture with a vast array of channels and a significant presence in both traditional and digital media, Reliance and Disney aim to capture a larger share of the Indian media market. The merger is also anticipated to drive competitive advantage by combining the strengths of both companies, thereby enhancing their ability to compete with other major players in the industry.

The successful completion of this merger will mark a new chapter in the Indian media and entertainment sector, characterized by increased consolidation and the emergence of large, integrated media entities. This consolidation is expected to result in more efficient operations, improved content offerings, and greater value for stakeholders.

As the merger process progresses, all eyes will be on the CCI’s decision, which will have significant implications for the competitive dynamics of the Indian media and entertainment industry.

Jhumpa Lahiri

Jhumpa Lahiri

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