March 5, 2024


Is the Disney-Reliance merger good for the Indian media sector?

The Indian media landscape is ripe with opportunity. A large population combined with demand for content on streaming means companies usually see India with big eyes and money signs. Companies like Netflix, Disney, Reliance, and Prime have all been jostling for position.

Two of those companies are now one. Disney announced a merger of its Indian business with Reliance in a $8.5 billion deal. The new entity will led by Nita Ambani and is widely expected to be the leading TV and digital streaming juggernaut. For the entertainment and sports business, it’s a big deal. However, is such consolidation good for the sector? Is it good for consumers?


Disney’s Indian presence goes back to 1993 when Disney India was formed as a joint venture between The Walt Disney Company and Modi Enterprises. That partnership lasted till 2003. The following year, The Walt Disney Company (India) Pvt Ltd operated as a wholly-owned subsidiary.

In 2004, it launched the Disney Channel and Toon Disney in five languages thanks to a distribution deal with The Star Group. In wanting to get a share of the local market, Disney bought a controlling stake in Hungama TV from UTV Software Communications Limited and took a 14.9% share in UTV. In 2008, it bought an additional 17.5% of UTV.

In 2012, the remaining shares in UTV were bought for $454 million and a new holding company, Walt Disney Company India, was formed to manage UTV and its other businesses. Then came the bad news – UTV Motion Pictures, which produced Bollywood movies, would be shut down, and the focus would be on Hollywood movies.

The company wanted to provide Disney original content in India and launched Disney International HD in 2017. Then came the next biggest deal that same year. It acquired Rupert Murdoch’s 21st Century Fox for $52.4 billion. That meant a lot of things for its Indian business. It got a major stake in Star India, Hotstar was now with Disney, and a 30% stake in Tata Play (previously called Tata Sky).

While Disney was making moves in India, it also made some big-money moves globally. In 2006, it bought Pixar for $7.6 billion. Marvel Entertainment and Lucasfilm came next in 2009 and 2012, respectively.

Coming back to India, Disney made its next big move in 2020 by entering the streaming space. Disney+ was launched in partnership with Hotstar, the streaming platform of Star India, to give stiff competition to the likes of Netflix and Amazon Prime Video.

While seemingly having an extensive content library catering to several age groups, its Indian business wasn’t immune to the company’s global struggles. They often struggled to make profits. It had to relinquish HBO content on Disney+Hotstar and lost the digital rights to the Indian Premier League (IPL). They were simply too expensive. The eventual decline in subscribers followed.

Disney had little option but to look for strategic opportunities to grow and share costs. In came Reliance, with its large cash reserves and streaming ambitions. Now we’ve got a new media goliath in India. But is this good for the Indian media and entertainment landscape?

VIEW: Good for whom?

The merged company could eventually brush aside its smaller rivals and devour market share. The timing of this deal is striking since it comes a few weeks after the Zee-Sony merger efforts fell apart. Given how valuable the merged entity’s combined assets are, the Competition Commission of India (CCI) will surely scrutinise this deal. Ideally, experts would want the CCI to order the company to sell some assets to prevent a monopoly in the telecom, media, and technology space.

The combined entity is expected to have a 35% viewership share in Indian television. Both companies have shelled out billions of dollars for cricket telecast rights in the past. Cricket is popular and generates crores of ad revenues. Some analysts estimate they’ll have a 40% share of the ad market, ahead of Sony and Zee. There’ll hardly be anything left for other companies. So, the CCI will need to take a look since even advertisers will have less bargaining power.

What about consumers? The question is whether consumers will benefit through lower prices or face higher costs due to reduced competition. Let’s take the aviation sector. The Tatas have Air India and Vistara for premium class passengers, and there’s a duopoly (Tatas again and IndiGo) for the economy segment. The sector now struggles with high fares and flight disruptions. Even though airlines aren’t in breach of CCI rules, passengers are at their mercy with limited options. This could be the scenario long-term in the Indian media and entertainment space.

COUNTERVIEW: There are benefits

The merger will definitely rejig advertising rates. There’s a legitimate concern that the new company will raise rates since they’ll wield a monopoly on live sports. However, some experts see this as a necessary course correction for pricing. Current ad rates are seen as too low for broadcasters and streaming companies to recover costs. Analysis by UBS stated that there’ll be some rationalisation in content costs, leading to some industry-level improvement in margins.

As far as linear TV (non-streaming) and sports are concerned, advertising rates will almost certainly increase. The merged entity might not be able to raise rates indiscriminately since advertisers will just walk away and look at alternatives. We should also remember that Amazon Prime and Netflix aren’t going away. Their library of content is good enough for them to stick around and for consumers to subscribe to.

India is a temperamental and price-sensitive entertainment market. People want value for their subscription money. There’s a steadily growing revenue stream from the OTT business. Some local players have taken advantage of market imperfections, which has resulted in user-generated content cannibalising ad revenues. This merger could help untangle some of those issues with more investments in content creation, technology, and distribution. The winner here is the consumer.

Reference Links:

  • Disney searching options for Star: A history of its investments in India – Business Standard
  • What We Know About The $8.5 Billion Disney Merger With Reliance In India – Forbes
  • A Goliath is born: Editorial on impact of the Reliance-Walt Disney merger of media assets – The Telegraph
  • A Disney-Reliance India entertainment merger may be beset with antitrust headaches – The Economic Times
  • Reliance-Disney merger may face CCI scrutiny over dominance fears, say experts – The Hindustan Times
  • Disney-Reliance Merger: Post-Quake Route Forward for Indian Media Becomes a Fight for Value and New Allies – Variety
  • Moneycontrol Pro Panorama | Reliance-Disney deal: A box office hit? – Moneycontrol

What is your opinion on this?
(Only subscribers can participate in polls)

a) The Disney-Reliance merger will be bad for the Indian media sector.

b) The Disney-Reliance merger will be good for the Indian media sector.


For the Right:

A rally that should not have taken place

For the Left:

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