CCI approves Reliance and Disney’s merger deal
The Competition Commission of India (CCI) okayed the $8. The proposed deal between Reliance Industries Limited (RIL) and Disney’s Indian media business involves USD 5 billion which makes it one of the biggest mergers in India ‘media market. This is the integration of Viacom18 Limited, a part of the Reliance Industries Limited with Star India Private Limited (SIPL) an indirect subsidiary of The Walt Disney Company. This new joint venture will produce a strong contender in the entertainment industry in India with more than 120 television channels and very vast streaming service.
Regarding the ownership structure in the merged joint venture organization, Reliance will own it majoritively, and the Reliance Industries Limited has committed an investment of ₹11,500 crore or about $1. 4 billion for furthering the joint organization. The post-merger enterprise value of the entity is approximately ₹70,352 crore or around $8. 5 billion excluding synergies. Reliance will be owning a 63.16% stake in the combined entity and Walt Disney will hold the remaining 36.84% stake.
It should however be noted that the merger was not without its fair share of controversy heading into the new millennium. The CCI raised doubts over monopolistic control particularly with cricket broadcast rights in the minds eye. In order to solve these problems, Reliance and Disney made a number of changes with regards to a variety of conditions, including promises not to charge unreasonable rates for the broadcast rights to cricket advertisements. These are the voluntary changes which the CCI considers necessary in order to maintain fair competitive practices in the media and entertainment sectors.
This merger is likely to quite shift the competitive dynamics and take on other rivals such as Sony, Netflix, and Amazon for other streaming services in the currently booming Indian entertainment market.
