CCI Greenlights Historic Merger: Reliance Industries and Walt Disney Set to Create India’s Largest Media Giant

The Competition Commission of India (CCI) has given the green light to the merger between Viacom18, backed by Reliance Industries, and Star India, owned by Walt Disney. This approval, granted three months after the companies filed for it, clears the way for the creation of India’s largest media and entertainment company.

Conditions to Prevent Monopolistic Behavior

The CCI’s approval is conditional, requiring the merged entity to follow certain voluntary modifications to the merger plan. These modifications aim to prevent the new company from engaging in monopolistic behavior, particularly in areas like sports broadcasting and content licensing. The full details of these conditions will be released by the CCI soon.

Next Steps in the Merger Process

With the CCI’s approval, the merger process will move forward, with the National Company Law Tribunal (NCLT) set to hold a final hearing on the merger scheme. Karan Taurani, Senior Vice President at Elara Capital, noted that getting the CCI’s approval was the most challenging part of the process, and that approvals from other bodies like the NCLT and the Ministry of Information & Broadcasting should follow more smoothly.

Ownership Structure and Valuation

Once merged, Reliance Industries will hold a 56% stake in the new company, Disney will have 37%, and Bodhi Tree Systems will own 7%. The combined entity will be valued at ₹70,352 crore and will have a strong presence in both television and streaming markets.

Impact on the Media Landscape

Mihir Shah, Vice President of Media Partners Asia, emphasized that this new company will have the scale and synergies needed to compete effectively in the media market, especially against global digital giants.

Investment and Future Plans

In terms of valuation, Star India is valued at ₹26,000 crore, while Viacom18 is valued at ₹33,000 crore. Notably, the streaming platforms Disney+ Hotstar and JioCinema are valued higher than the traditional TV businesses of Star and Viacom18. Reliance Industries plans to invest ₹11,500 crore into the merged company, adding to the over ₹22,000 crore it has already invested in the media and entertainment sector.

Changes in Leadership and Operations

The merger will also see changes in leadership and operations. Nita Ambani and Uday Shankar will serve as Chairperson and Vice Chairperson, respectively, of the merged entity. K Madhavan, the head of Disney Star, is expected to step down. Additionally, some second-tier entertainment channels may be shut down, and there is talk of merging Disney+ Hotstar into JioCinema to create India’s top streaming platform.

A Milestone in India’s Media Industry

This merger is seen as a significant milestone in India’s media industry, marking a major shift in the competitive landscape. It is expected to impact content production, advertising, and consumer choice. According to Abhishek Malhotra, Founding Partner at TMT Law Practice, the CCI’s approval reflects a hands-off approach, allowing the new company to prove its commitment to fair competition while remaining under CCI’s watchful eye for any future anti-competitive behavior.