Reliance and Disney initiate antitrust diligence for merger in India

Indian business tycoon Mukesh Ambani’s Reliance Industries and global entertainment giant Walt Disney have taken decisive steps towards their proposed merger with the Indian media and entertainment sector. According to reliable sources, both companies have engaged prominent law firms for antitrust due diligence.

Reliance Industries has enlisted the services of Indian law firms Khaitan & Co. and Shardul Amarchand Mangaldas, while Walt Disney has partnered with AZB & Partners. This move marks a crucial phase in the anticipated merger, considering both entities, with substantial streaming services and a combined total of 120 television channels, aim to establish an entertainment powerhouse in the world’s most populous nation.

The potential merger, expected to grant Ambani’s group a majority stake, gained momentum as senior executives from Disney and top officials from Reliance convened in London in late December 2023. During the meeting, a non-binding term sheet for the deal was reportedly signed, indicating progress in the negotiations.

The complexity of the merger becomes apparent as industry observers anticipate potential antitrust challenges and heightened scrutiny. It was reported that assets, particularly TV channels, may need to be divested to alleviate concerns about their combined market power.

It has also been reported that the antitrust review is currently in its initial stage. If the deal materializes, it would mark the second significant transformation in India’s TV and streaming landscape, following Japan’s Sony’s plan to merge with India’s Zee Entertainment.

Disney’s struggles in the Indian market, particularly against Reliance’s aggressive move to offer free streaming of the Indian Premier League cricket tournament, have been evident. The digital rights for IPL were once held by Disney in India. Antitrust experts suggest that a key focus of scrutiny in a potential Disney-Reliance merger would be their streaming business and their influence over advertising during cricket events.

As of now, Disney’s Hotstar app retains the rights for the International Cricket Council’s matches in India until 2027, while Reliance’s JioCinema app holds the rights for the IPL. Early-stage discussions have reportedly revealed disagreements among company executives regarding the relative valuation.

As of now, Disney's Hotstar app retains the rights for the International Cricket Council's matches in India until 2027, while Reliance's JioCinema app holds the rights for the IPL. Early-stage discussions have reportedly revealed disagreements among company executives regarding the relative valuation of Disney and Reliance's entertainment unit.