Reliance Industries, controlled by Mukesh Ambani and Walt Disney, as part of their proposed mega-media and entertainment merger listed on the New York Stock Exchange, have reportedly hired legal firms and begun antitrust due diligence, according to Reuters, which cited top sources.
Reliance has assigned Shardul Amarchand Mangaldas and the law firm Khaitan & Co., while Disney has enlisted AZB & Partners, according to the report.
The appointments are the most recent indication of development as the two entertainment behemoths’, who together own 120 television stations and a sizable streaming service, consider joining forces to form an entertainment powerhouse in the most populated country in the world. It is anticipated that Ambani’s gang will own the majority of the company.
The Reliance–Disney Merger progressing
Citing the start of the antitrust as a step ahead of Walt Disney and Reliance Industries, the companies inked a non-binding term sheet to combine their Indian media businesses.
In late December, top Reliance officials from Mumbai and senior Disney executives from Burbank headquarters travelled to London to sign a non-binding term sheet on the deal.
Without providing further details, Reliance described the article as “speculative” and stated that it had “no comments to offer”. Disney opted not to respond. In addition, Khaitan and Shardul declined to comment, while AZB did not answer right away.
According to Reuters, any potential merger between Disney and Reliance would probably encounter antitrust issues and close examination. To allay worries about their combined market dominance, assets like TV networks would probably be sold up.
Some sources revealed that the Reliance-Disney merger due diligence, the antitrust review’s work is just getting started.
The two Industries potential agreement would be the second to drastically alter India’s TV and streaming market, as Sony (6758.T) of Japan also intends to combine its Indian operations with Zee Entertainment (ZEE.NS).
The Viacom18 Company, owned by Reliance, plans to create a step-down subsidiary that will purchase a substantial amount of Star India’s stock, culminating in a shareholding pattern of 51%:49%. According to the report, Disney will own 49% and Reliance 51% of the combined Indian media company.
Jio Cinema will also be a part of the deal, and Reliance is expected to pay cash for controlling stock in the combined company while keeping a sizable interest.
Will Reliance provide the much needed boost for Disney?
Disney’s operations in India have been hampered by difficulties as a result of Ambani’s aggressive dispute with the American corporation over the free broadcasting of the Indian Premier League cricket (IPL) competition, the digital rights to which Disney originally held.
According to antitrust experts who spoke with Reuters, a major area of antitrust scrutiny for a Disney-Reliance combination would be their streaming companies and their control over advertising during cricket.
The rights to International Cricket Council matches in India belong to the Disney Hotstar app until 2027, whereas the rights to the Indian Premier League belong to Reliance’s JioCinema app.
Reuters has reported that during preliminary discussions, executives of the companies couldn’t agree on which entertainment division, Disney or Reliance, is worth more.
The possible timing for the merger
The media company Zee Entertainment is attempting to finalize a merger with Culver Max Entertainment, formerly known as Sony Pictures Networks India, at the same time as the massive merger is taking place.
Originally scheduled to occur by the end of 2023, the $10 billion agreement has not yet been finalized because of a number of obstacles and legal entanglements.
The merger agreement was scheduled to be sealed by September 2023, having been finalized in 2021. It was subsequently moved to December 22, 2023.
Possibly by February 2024, both the companies are anticipated to complete their major media and entertainment merger in India.
