Reliance Industries Ltd (RIL) is in advanced discussions with Walt Disney Co. to merge their media and entertainment operations in India. The potential merger, led by RIL’s Mukesh Ambani, could result in the formation of the nation’s largest media conglomerate. RIL plans to create a subsidiary of Viacom18, which will integrate Star India via a stock swap, aiming for a controlling stake of over 51% in the combined entity. Disney would hold the remaining 49%.

What’s the plan? According to an ET report, both companies are negotiating a capital injection plan, estimated between $1-1.5 billion, to determine a shareholding structure.

The proposed board would have equal representation from RIL and Disney, with additional seats for Uday Shankar-led Bodhi Tree and at least two independent directors. This structure may evolve in the upcoming weeks.

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Key negotiations involve RIL’s Manoj Modi and Disney’s top executives, including Justin Warbrooke and Kevin Mayer. The goal is to sign a term sheet soon, possibly by the end of January, following an accelerated merger timeline. This would lead to confirmatory due diligence and an official valuation process.

Strategic implications and licensing: The joint venture might receive a five-year exclusive content license for Disney+ originals, with a lock-in period barring the IPO of the merged entity. RIL’s Jio Platforms would be a key distribution channel.

Viacom18 and Star India have experienced varied financial results, with Viacom18‘s net profit dropping and Star India’s consolidated net profit declining, despite revenue increases. The merger aims to capitalize on potential synergies, transforming the value of the businesses in the long term.

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