Disney has taken another big step toward realigning its India strategy. The company has signed a non-binding term sheet with Reliance Industries that would see the two merge their Indian operations, the completion of which would create one of India’s biggest entertainment empires. The news was first reported by The Economic Times.Under the terms, Indian billionaire Mukesh Ambani’s Reliance group would own 51% of the merged entity through a combination of shares and cash. Disney would hold the remaining 49% of shares.The term sheet was finalized at a meeting last week in London that saw Bob Iger advisor Kevin Mayer representing Disney and Ambani advisor Manoj Modi there for Reliance. According to the Economic Times, the duo has been working for months on terms.The merger deal is expected to be completed by February, even though Reliance is said to be hoping to wrap it up in late January.Iger, who has cut thousands of jobs this year and faces pressure from activist investor Nelson Peltz, said on last month’s earnings call that Disney would like to stay in India, but try and “strengthen our hand, improve the bottom line.”Hotstar, the streaming outlet initially launched by Star India, came under Disney’s control as part of the $71.3 billion acquisition of 21st Century Fox assets in 2019. Disney has used the Star assets in various ways to help attain its goal of 300 million to 350 million overall streaming subscribers by 2024. It integrated Disney+ as a low-cost add-on for Hotstar subscribers, boosting overall Disney+ subscriptions, albeit at lower margins.Disney+ Hotstar is Disney’s biggest streaming service globally in terms of users, but started shedding subscribers after losing the Indian Premier League Cricket (IPL) to streaming app JioCinema in a $2.9BN deal last year. JioCinema is jointly owned by billionaire Ambani’s Reliance Jio, Paramount Global and James Murdoch and Uday Shankar’s Bodhi Tree Systems.Disney executives said the studio had miscalculated the appetite of Indian consumers to switch from free viewing to premium plans.“We were bullish on Indian subscribers’ propensity to pay. That’s not worked out,” an internal source told Reuters. “Free cricket is the only bullet left.”Disney acquired Hotstar, which already owned IPL rights, as part of its $71BN acquisition of 21st Century Fox global assets in 2019. While IPL matches were previously offered for free, Disney made them part of a paid service in 2020.The Disney-Reliance merger move in India comes as the proposed $10 billion combination between Zee Entertainment Enterprises and Sony Group Corp.’s local unit, which would create the biggest media amalgamation ever in India, remains pending after two years.
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