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Iger also said that the JV deal will allow Disney to own a significant stake in a larger media entity and also maintain a presence in the Indian market.
Mounting losses from the Indian sports business and the decline in Disney+ Hotstar’s subscribers due to the loss of the Indian Premier League (IPL) digital rights had compelled Disney to consider strategic options for its India business.
RIL’s Viacom18 will merge into Disney’s Star India to create an $8.5 billion media entity. Viacom18 is valued at $4 billion, while Star India is valued between $3-3.5 billion.
In 2019, Disney acquired Star India for over $15 billion as part of its 21st Century Fox acquisition. Star India, which has been rebranded as Disney Star since, is India’s largest media entity with dominant market shares in both TV and digital.
The Star-Viacom18 merger is set to become India’s largest media entity, with a topline of approximately Rs 25,000 crore.”We wanted to stay in India. We made a big investment in India when we purchased the assets of 21st Century Fox. We’re one of the biggest media companies in India. But even though it’s the most populous country in the world, and we felt we want to be there because of that, we also know that there are challenges in that market,” Iger said while speaking at the Morgan Stanley Technology, Media & Telecom Conference on March 5.”And we had an opportunity to align with Reliance, which is the company that has done very well there and one that we respect. And in doing so, we end up owning part of a bigger media company. And we believe that it should not only benefit us in terms of the bottom line but also derisk us there,” he added.
Iger also termed the Star India-Viacom18 JV deal the best of both worlds because Disney has a great partner in RIL, which is India’s largest telecom company with significant assets in the media sector.
“So, it’s kind of the best of both worlds. We stay in the market at a significant level. We have a very good partner in Reliance, and we get to have a chance of growing a business and lowering the risk of doing so,” Iger noted.
On February 28, RIL, Viacom18, and Walt Disney said that they had signed definitive agreements to form a JV by merging Viacom18’s media operations into Star India through a court-approved scheme of arrangement. The Mukesh Ambani-led RIL has committed to investing Rs 11,500 crore ($1.4 billion) in the JV.
RIL, Viacom18, and Disney will own 16.34%, 46.82%, and 36.84% of the JV, respectively. RIL will control the JV as it also owns a majority stake in Viacom18. Bodhi Tree Systems, which is promoted by Uday Shankar and James Murdoch, also owns a roughly 16% stake in Viacom18.
The JV will comprise TV and streaming video platforms across entertainment and sports, including JioCinema and Hotstar, which have over 750 million viewers in India and the global diaspora.
Nita Ambani will serve as the chairperson of the JV, while Shankar will provide strategic guidance as its vice chairperson.
