Reliance, Bodhi Tree set for 60% stake in Disney India merger

New Delhi: Billionaire Mukesh Ambani's Reliance is close to merging its India media business with Walt Disney with a 51%-54% stake, a deal that values the US giant's Indian operations at just $3.5 billion, said three sources with direct knowledge.

The valuation of Disney's India unit is sharply lower than the $15-$16 billion estimated when Disney acquired Fox in 2017. Its TV and streaming business in India has struggled over the years, with its digital platform especially facing a user exodus in stiff competition over cricket streaming with Ambani's plaforms.

The deal will strengthen Reliance's hold over India's $28 billion media and entertainment market, especially after a separate $10 billion merger deal between Japan's Sony and India's Zee Entertainment collapsed last week.

The three sources said Bodhi Tree, a joint venture between James Murdoch and a former Disney executive, Uday Shankar, is also in talks to take a stake of around 9% in the new merged entity. Disney will hold around 40%.

Reliance, Disney and Bodhi Tree did not immediately respond to requests for comment.

Reliance and Disney, which each have a streaming service as well as 120 television channels between them, have been in talks for months to create an entertainment superpower in the world's most populous nation.

Under the deal being discussed, Viacom18, the broadcast division of Ambani's Reliance Industries, will merge with Disney's India businesses. Viacom18's shareholders include Paramount Global as well as Bodhi Tree, which invested $500 million in the Indian company last April. Shankar also serves on Viacom18's board.

Two of the sources said the final percentage stake numbers could change. The sources declined to be identified beccause the talks are confidential.

A deal could be closed by mid-February, the sources said. One of the executives said Viacom18 was also likely to infuse some cash in the merged entity.

The third source said the deal talks were in advanced stages and some tax related matters were still being ironed out, though broad contours were almost finalised.

CRICKET RIGHTS

Despite India's large population with growing income, Disney has struggled to make money in the region. Its streaming service makes less than a tenth of its Average Revenue Per User (ARPU) in India compared to the US and other international markets.

The US firm's streaming service lost nearly 34% of its subscribers between October 2022 and August 2023, as Ambani started offering free cricket on his new streaming platform after out-bidding Disney for the Indian Premier Legaue (IPL) cricket tournament rights.

Disney misjudged Indians' willingness to pay, Disney sources have said, and the company recently changed tack by offering free cricket on smartphones, hoping the strategy will boost advertising revenue and offset the impact of a subscriber exodus, Reuters reported.

In November, Disney CEO Bob Iger said Disney's TV channels were doing well in India, but other parts of the business were struggling and it was seeking to "improve the bottom line."