Reliance-Disney merger: Experts spell out opportunities and challenges

On February 28, 2024, The Walt Disney Company sold its India business to Mukesh Ambani’s Reliance Industries at a $3.5 billion valuation, which it bought from Rupert Murdoch for $14 billion seven years ago.

Harsha Razdan

According to Harsha Razdan, CEO, South Asia, dentsu, the Viacom18-Disney Star merger will open gates of opportunities as well as throw challenges for the advertising and marketing industry.

Throwing light on the positive side of the merger, Razdan said, “It will unlock fresh possibilities for crafting and deploying innovative and compelling campaigns across an extensive and diverse portfolio of channels and platforms, providing advertisers with extensive reach.”

When it comes to challenges, Razdan said, “The merger will also heightens competition and enhances the negotiating power of the newly merged entity, enabling it to exert greater control over pricing and inventory.”

The merger will give rise to a giant media powerhouse boasting over 108 channels. With Star India contributing 70+ TV channels across 8 languages and Viacom adding 38 TV channels in the same number of languages, alongside two prominent OTT apps (Jio Cinema and Hotstar) and two film studios (one under Reliance and the other under Disney India), the combined entity will wield significant influence in the media landscape. The combined entity will have more than 750 million viewers across India.

Ashish Karnad

Ashish Karnad, Head – Media & Digital, Hansa Research anticipates that both Viacom18 and Disney Star India channels will continue to function as separate brands, it's unlikely that the merged entity will kill any of the big profitable brands. However, there could be some channels that are not profitable and might be shut down, he added.

Having said that, Karnad points out that there could be rationalisation at certain operating levels, which could mean loss of jobs for certain people.

He further said, “The rationalisation could also happen at other levels like content sourcing, marketing spending, sales bundling etc. which means a few changes in the ecosystem on these fronts can be expected.”

Disney Star India earlier had a monopoly over sports broadcasting. With Viacom18 bagging the digital rights to IPL and BCCI media rights, there came a duopoly for a brief period, which will again be a monopoly after the JV.

Advertisers park their substantial amount of ad budget in sports, especially cricket in general. Karnad believes that both JioCinema and Star Sports will continue to pitch IPL to brands separately until brands start getting integrated unduplicated viewership numbers across TV and Digital.

The unified entity will boast a portfolio of highly sought-after sports properties, including the Indian Premier League (broadcast both on TV and digital platforms), ICC cricket tournaments (featured on both TV and digital platforms), Wimbledon, Pro Kabaddi League, and BCCI domestic cricket, among others, presenting a compelling proposition for advertisers.

Razdan hopes that in the coming years, the merger achieves a balanced outcome as it's crucial to maintain two or three major players in the market to foster a healthy and competitive environment, which ultimately should serve the end consumer.

If regulators and shareholders approve, the merger will create a Rs 70,000 crore-behemoth.

In the JV, Reliance and its affiliates will hold 63.16 per cent while Disney will hold the remaining 36.84 per cent, as per the announcement made on Wednesday.

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