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The making of an entertainment giant with lion’s share of advertising

As billionaire Mukesh Ambani’s Reliance Industries is reportedly on the verge of a landmark deal of acquiring Disney’s India business, a multi-billion-dollar entertainment behemoth with significant advertising heft is in the making.

The potential deal, which is expected to include the entire Star India and Viacom18 operations, will mark the coming together of former rivals and their combined 111 channels across at least eight languages, as well as two streaming platforms with the largest subscriber base and the strongest distribution might. Disney reportedly values the India business at around $10 billion, whereas Reliance’s valuation of the assets is reportedly $7–8 billion.

On the TV front, the combined entity will hold 111 channels (Star India’s 77 channels and Viacom18’s 38 channels) across at least eight languages. Together, they command 35-40 per cent share in the Indian television network market and 40 per cent advertising share. “The merged entity may have to shut down some channels because of the large overlap, but it will still spark off consolidation in the TV industry as many channels may be forced to switch to OTT or shut shop,” said an OTT expert and former TV network executive on condition of anonymity.

The deal, which is yet to be confirmed, will involve the ironing out of several tax and legal creases, the person pointed out, adding that it is likely to attract intense CCI scrutiny after completion, given the sheer magnitude.

On the OTT front, the combined might of JioCinema and Disney+ Hotstar will result in a mega entity with the largest subscriber base and the strongest distribution might. Disney+ Hotstar’s around 40 million subscriber base is still the largest in the country, despite the IPL void. Together, they will account for an estimated 35% of the advertising-based video on demand (AVOD) OTT market.

The person quoted above pointed out that JioCinema brings the distribution backing of group telecom firm Reliance Jio’s around 450 million subscribers. “This could potentially signal consolidations of Indian OTTs, and intense competition for global giants like Netflix and Amazon,” the person said.

Money-spinning Indian cricket viewing and advertising are at stake. Between Reliance’s broadcast business Viacom18 and Disney Star, the two hold rights totalling nearly Rs 55,000 crore to three major cricket properties in India for the next 4-5 years — the Indian Premier League, International Cricket Council rights for men’s and women’s global events, and India bilateral matches across TV and digital platforms. This means that they will corner close to 80-90% of the Rs 9,000-Rs 10,000 crore cricket ad revenues in India across TV and digital platforms. This leaves the combined platform will be able to charge premium rates from advertisers and also put cricket content behind a paywall.

The deal will also hit telecom major Bharti Airtel, said the expert. As a telecom platform, Jio will likely become a content hub with enhanced content offerings of the post-merger OTT platform and it will force Bharti Airtel to build partnerships with global OTT giants such as Netflix and Amazon to generate clout in the content ecosystem. Business Today

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