Reliance-Disney's Rs 70k cr JV a big boost to India's entertainment industry

Reliance-Disney JV: In a major move set to shake up the media industry, Reliance Industries Limited (RIL), backed by billionaire Mukesh Ambani, has embarked on a crucial venture in the media and entertainment sector by joining forces with Viacom 18 Media Private Limited and Walt Disney Company. 

The agreement entails merging the media operations of Viacom18 and Star India into a joint venture (JV), marking a strategic move to boost RIL's foothold in the industry.

India media and entertainment industry

The Media & Entertainment (M&E) industry in India is anticipated to hit $100 billion by 2030, as per Invest India. While an EY report said that the industry is projected to grow from Rs 2.34 lakh crore ($29.2 billion) to Rs 2.83 lakh crore ($35.4 billion) by 2025, with a compound annual growth rate (CAGR) of 10 per cent. 

Furthermore, advertising revenue is forecasted to reach Rs 39,400 crore ($5.42 billion) by 2024. 

Traditional media, including television, print, filmed entertainment, out-of-home (OOH), music, and radio, accounted for 58 per cent of the sector's revenues in 2022.

Deal contours

Under the terms of the deal, RIL will inject Rs 11,500 crore billion into the JV, securing a 16.34 per cent stake. The investment stresses upon RIL's commitment to expanding its presence in the media landscape. 

Through a subsidiary, Viacom18, RIL will maintain control of the JV with a total ownership of 63.16 per cent, while Disney will hold the remaining 36.84 per cent.

The transaction values the JV at Rs 70,350 crore on a post-money basis, reflecting the major potential and value attributed to the combined media assets of Viacom18 and Star India, Motilal Oswal analysts noted.

The valuation metrics of the deal highlight the strategic importance of the partnership and its potential for future growth and profitability. Meanwhile, the collaboration will unite a diverse portfolio of media assets, including popular entertainment and sports channels such as Colors, StarPlus, StarGOLD, Star Sports, and Sports18. 

Additionally, viewers will have access to digital platforms like JioCinema and Hotstar, enhancing the reach and accessibility of content across India, the brokerage said.

Among the key highlights of the partnership is the exclusive rights granted to the JV to distribute Disney films and productions in India. With access to over 30,000 Disney content assets, the JV is set to offer an extensive array of entertainment options to consumers nationwide.

Furthermore, the management team of the JV will be led by Nita Ambani as Chairperson.

The combined strength of Viacom18's extensive channel portfolio, including 40 channels and the JioCinema OTT platform, alongside Star India's vast viewer base of over 700 million and the Disney+ Hotstar OTT platform, positions the JV as a formidable player in the Indian media landscape.

With the merger of media assets and the exclusive distribution rights to Disney content, the JV aims to cater to the diverse entertainment needs of Indian audiences while capitalising on the rapidly evolving digital landscape, Motilal Oswal added.

The partnership marks a crucial milestone for RIL as it seeks to expand its presence in the media and entertainment sector, leveraging strategic collaborations to drive growth and innovation in the dynamic Indian market.

Considering these factors, Motilal Oswal has a ‘buy’ rating on Reliance Industries for a target price of Rs 3,210 per share.

As of 1:20 pm, shares of Reliance Industries were trading 0.52 higher at Rs 2,924 per share.