The Walt Disney Company already had a wink the size of India in 1993 when it first came to the country, which now has 1.4 billion potential media consumers. It started small, finding a distributor who would distribute some of its content across airwaves that were just opening up to global capitalism.
Along with the Indian market, Disney’s ambitions also grew. Last year, accounting and consulting firm EY estimated that India’s media landscape would be worth $100 billion by 2030. And Disney was betting on attracting hundreds of millions of subscribers to its own streaming services.
These ambitions have stalled. On Wednesday, Disney announced that it would merge its Indian operations under those of Viacom18, part of Reliance Industries, India’s largest conglomerate. Reliance and Viacom18 will hold 63 percent of the new whole Disney in the passenger seat, left with 37 Percentage of ownership of the joint partnership. Reliance will spend over $1.4 billion to consolidate its control.
Disney is one of the largest companies in the world – valued at $200 billion on the stock market – but in India it was no match for the homegrown hero.
Disney’s adventures in India reached its peak in 2019 when it acquired 21st Century Fox from News Corp. bought from the Murdoch family. Among Fox’s assets, Disney won TV and streaming rights to the hugely popular Indian Premier League cricket matches.
Large numbers of subscribers followed, albeit at high costs. At its pandemic-induced peak, Disney+ had 162 million subscribers in India but lost nearly $500 million globally in tracking viewers. As of summer 2022, its global business had lost more than $11 billion since the purchase of Fox and the launch of Disney+.
That’s when Disney got into trouble. It was blocked by an even bigger player with an even more resilient risk appetite. Reliance Industries, owned by Mukesh Ambani, India’s richest man, outbid its rivals and stripped him of cricket rights for nearly $3 billion. Disney quickly lost 11.5 million subscribers in India, while gaining 800,000 in the rest of the world.
Disney is big, but Mr. Ambani’s Reliance is even bigger: With a market capitalization of $239 billion, the company is well prepared for any bidding war. On the Indian battlefield, Reliance knows how to play better than any other company, let alone any foreign one. When Mr. Ambani decided to expand his reach into the media, it was hard to imagine that he would not come out on top.
When Reliance was founded by Mr. Ambani’s father in 1958, it was a trading business that mainly sold polyester fibers. The company evolved into petrochemicals and now operates the world’s largest oil refinery at the port of Jamnagar, on a remote part of India’s west coast. Over time, the company moved into telecommunications and other businesses, launching Jio in 2016, a mobile network offering free calls and cheap data, which quickly became the third largest in the world.
JioCinema, part of a growing family of Jio providers but a relatively small platform at the start of India’s streaming wars, is set to become the new home for Disney content in India. At some point, another rival appeared to be on the rise, as Japanese media giant Sony wanted to expand its operations in India by purchasing Zee Entertainment.
With Zee, India’s first private cable television company, Sony would have been big enough to split the TV and digital market with Reliance-Disney. But Sony, which like Disney is a foreigner and prone to misjudging the intrigues within Indian companies, pulled out of the deal with Zee on January 22, frustrated by the founding family’s insistence on remaining in control.
Sony’s split from Zee seems to have made things even more difficult for Disney. Bloomberg reported that the estimated value of Disney’s India unit fell from $10 billion to $4.5 billion. For one thing, Zee still owes Disney the cricket license. The collapse of their merger also made the final deal seem more palatable to Mr. Ambani: What would have been a landscape defined by two giants is instead likely to be dominated by just one.
Karan Taurani, research analyst at Elara Capital, said Disney and Reliance already have a combined market share of about 40 to 45 percent in advertising and about the same share in streaming, giving them a huge lead over competitors.
“This will lead to better profitability as content costs could fall” on both television and streaming, Mr. Taurani said. “So you will see smaller players lose market share and some may even close.”
Because Reliance is such a sprawling conglomerate, it has a discrete advantage in the battle for media supremacy. It is not necessary for content to pay for itself immediately. When their subscribers are included in their retail, telecommunications and credit operations, the cost of producing shows appears small compared to the total revenue.
Brooks Barnes contributed reporting from Los Angeles.
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2024-02-28 14:03:09
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