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Reliance Jio-Disney+Hotstar merge, duo plans to create India’s largest entertainment business

As per reports, the stock-and-cash merger will see a 51:49 split in favour of Reliance Jio. The related commercial and regulatory processes are expected to be completed by February, 2024.

Updated on January 5, 2024, at 9:50 AM: Reliance Jio and Disney have both appointed law firms and begun anti-trust due diligence for their reported merger, according to a Reuters report.

We missed this earlier: Reliance Jio and Disney+ Hotstar have signed a non-binding term sheet, with a 51:49 split in favor of Jio, Economic Times reported on December 26, 2023. The duo aims to establish India’s largest media and entertainment business, anticipating completion of commercial and regulatory processes by February. The report further suggests that the current plan behind the merger is to create a “step down subsidiary” of Viacom 18 (which includes Jio’s streaming service JioCinema) that will absorb Star India via a stock swap.

This comes as an expected development with speculations surrounding a possible merger circulating since September 2023. When asked about Disney’s plans for its Indian ventures during the earnings call last quarter, CEO Robert Iger had said that the company would, “like to stay in that market [India]. But we’re also looking to see whether we can strengthen our hand obviously, improve the bottom line.” He had said that while the company’s linear business (its cable television channels such as ESPN and Disney Channel) was doing well, other parts of the Indian business have posed Disney some challenges and that the company was considering its options with the challenging parts. While he hadn’t specified which segments were challenging, Disney+Hostar saw a 7% decline in subscribers in the same quarter going from 40.4 million in Q3FY23 to 37.6 million.

Possible reasons behind this merger:

In 2022, Disney+ Hotstar lost the streaming rights for the cricket tournament, Indian Premier League (IPL) to Reliance Industries-owned Viacom 18. IPL has since been streamed on JioCinema (another Reliance Industries venture) and has proven to be beneficial to the platform’s success, with 32 million people watching IPL at its peak, based on Reliance’s earnings call in July 2023. The company also ended its agreement with HBO in 2023 with HBO then shifting its content to JioCinema. HBO’s shift to JioCinema came only days before the latter launched its premium annual subscription.

With Jio now holding majority ownership over Disney+ Hotstar, JioCinema would become an even more attractive platform to subscribe to.

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