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The Walt Disney Company on Wednesday announced a joint venture with India’s largest conglomerate, Reliance Industries, in an $8.5 billion deal that will create a media powerhouse in the world’s most populous nation and end the decades-long effort of Disney alone to gain a foothold in the market. .
Reliance Industries, owned by Mukesh Ambani, India’s richest person, will be Disney’s lead partner in the deal. With $239 billion in market capitalization and rights to popular Indian Premier League cricket matches, Reliance is a giant in the Indian media landscape.
Disney and Reliance already had a combined market share of about 40 to 45 percent in advertising and about the same fraction in streaming, giving them a big advantage over their competitors, said Karan Taurani, research analyst at Elara Capital.
“This will lead to better profitability because content costs could be reduced” in both television and streaming, Taurani said.
As part of the deal, Disney will merge its Indian operations with those of Viacom18, part of Reliance Industries. Reliance and Viacom18 will hold 63 percent of the new company, and Disney 37 percent, companies said in a statement. Reliance will pay $1.4 billion to consolidate its control.
Nita M. Ambani, Mr. Ambani’s wife, will be the president of the joint venture; the vice president will be Uday Shankar, former president of Disney India.
“Reliance has a deep understanding of the Indian market and consumer,” Robert A. Iger, Disney’s chief executive, said in a statement. “We are excited about the opportunities this joint venture will provide to create long-term value.”
Disney is one of the largest companies in the world, valued at 200 billion dollars; but in India he was no match for the local hero.
Disney first came to India, now a country with 1.4 billion potential media consumers, in 1993, and found a distributor to stream some of its content.
Along with the Indian market, Disney’s ambitions grew. Last year, accounting and consulting firm EY estimated that India’s media landscape would be worth $30 billion this year and $100 billion in 2030. And Disney gambled on attracting hundreds of millions of subscribers to its own services. streaming.
Disney’s adventures in India reached a climax in 2019, when it bought 21st Century Fox from the Murdoch family’s News Corp. Among Fox’s assets, Disney won the television and broadcast rights to Indian Premier League cricket matches.
Large numbers of subscribers followed, but at great cost. At its pandemic-driven peak, Disney+ had 162 million subscribers in India, but was losing nearly $500 million globally in pursuit of viewers. By summer 2022, its global operations had lost more than $11 billion since the purchase of Fox and the launch of Disney+.
That’s when Disney ran into trouble. Reliance Industries snatched up the cricket rights in 2022 for almost $3 billion. Disney lost 11.5 million Indian subscribers in a short time, even as it gained 800,000 new ones in the rest of the world.
Still, Disney is not abandoning India.
“India remains a key market for the company and one of the fastest growing markets internationally, and we are committed to ensuring a strong presence there,” Disney executives said in an email to employees on Wednesday.
When Mr. Ambani’s father founded Reliance in 1958, it was a commercial store, mainly made of polyester fiber. He converted to petrochemistry and now runs the world’s largest oil refinery at the port of Jamnagar, in a remote area of India’s west coast. Along the way, he ventured into telecommunications and other businesses, and in 2016 he started a low-cost mobile network, Jio, which quickly became the third largest in the world.
JioCinema, part of a growing family of Jio properties but a relatively small platform when the streaming wars began in India, looks likely to become the new home for Disney content in India. At one point, it seemed another rival was about to emerge, as Japanese media giant Sony sought to expand its operations in India by purchasing Zee Entertainment.
With Zee, India’s first private cable TV company, Sony would have been big enough to split the TV and digital market with Reliance and Disney. But Sony backed out of its deal with Zee on Jan. 22, frustrated by the founding family’s insistence on maintaining control.
Sony’s breakup with Zee seems to have complicated things even more for Disney. For one thing, Zee still owes Disney for the cricket licenses. Bloomberg reported that the estimated value of Disney’s India unit sank from $10 billion to $4.5 billion. The failed Sony merger also made the eventual deal with Disney look more attractive to Ambani: what would have been a landscape defined by two giants instead seems likely to be dominated by just one.
Being a sprawling conglomerate, Reliance has an advantage in battles for media dominance. You do not need the content to be paid for directly. When your subscribers enter your retail, telecommunications and credit operations, the cost of carrying programs seems small compared to the combined revenues.
Brooks Barnes contributed reporting from Los Angeles.