With Reliance Industries and The Walt Disney announcing the merger of Viacom18 and Disney Star, the country is all set to get its largest media company soon. According to market estimation, the merged company will control 40% of TV advertising and 42% of the total TV market share. It is also predicted to command a digital OTT market share of 34% in 2023. The new company will have over 750 million viewers across India and will also cater to the Indian diaspora across the world.

While the big union of Reliance and Disney will definitely change the landscape of the TV and the OTT industry in the country, can it also disrupt the Google-Meta media duopoly?  Experts believe that in broader terms, the new entity will be a challenge to the tech behemoths, but since it is not in direct rivalry with Google-Meta, the impact may not be significant. Some industry watchers, however, feel that the merged digital entity can compete with Google's VOD platform YouTube.

According to Vivek Menon, Managing Partner – NV Capital, the merged entity will impact the tech giants to a certain extent. “The trend has already started where ad dollars are moving onto other larger digital platforms and this would be more evident in the OTT space where the bigger platforms like Reliance-Disney with their linear, non-linear as well as marque sports properties framework would gain huge traction in India and corner a substantial part of the overall ad revenue pie,” he added.

Menon, however, pointed out that both Google, through YouTube, and Facebook are short-form/social media platforms whereas Reliance-Disney and other OTT platforms are more focused on long-form content. 

In the Indian M&E sector, the top 14 media giants collectively contribute Rs 1.11 trillion. The combined revenue of Google India and Meta, which hold the top two positions respectively, stood at Rs 43,308 crore in FY2023. The combined revenue of Google India and Meta is higher that the combined revenue of the four top media companies, Disney Star, ZEEL, Times Group and Sony, amounting to Rs 42,628 crore. 

Sanjay Trehan, a new media and digital consultant, shared that in the entertainment space, the merged entity is going to be the numero uno player because it will command 40% of the market share. “In terms of the streaming and sports content, this is going to be unbeatable. The complete library of JioCinema along with Disney+ Hotstar will become a big player in the industry. In the short-term, some money may move from digital giants to the new entity, but, it does not directly compete with Google and Meta.”

He added, “Definitely a significant chunk of ad dollar will move to the combined entity, but this will be drawn from the existing pie of the OTT. It may actually end up consolidating the market and help grow the market or the advertising pie. In the long run, I see the advertising pie growing.”

According to Karan Taurani, SVP, Elara Capital, the merger of JioCinema and Hotstar poses a challenge for global OTT platforms, as India's market values bundling and is price- sensitive. “The combined entity can offer a comprehensive package including web series, movies, sports, originals and a global catalogue. This bundled premium plan, possibly in collaboration with Jio's large subscriber base, may hinder the ability of global OTT platforms to raise Average Revenue Per User (ARPU).”

“On the sports front, the merged entity is set to become monopolistic, with Disney and JioCinema collectively controlling approximately 75-80% of the Indian sports market across both linear TV and digital platforms. This dominance in sports, primarily cricket, positions them to command a substantial share of the overall ad market, showcasing strong growth in an industry where sports is a key driver of viewership on both linear TV and digital platforms,” said Taurani.

In CY22, sports AdEx (TV+Digital) in India stood at Rs 71bn (according to GroupM). In this figure, Disney India had a contribution 80%. The combined entity will have lucrative sports properties like Indian Premier League (both TV and digital), ICC tournaments (both TV and digital), Wimbledon, Pro Kabaddi League, BCCI domestic cricket etc, as per a report from Elara Capital.

On February 28, Reliance Industries Limited, Viacom 18 Media Private Limited and The Walt Disney Company announced the signing of binding definitive agreements to form a joint venture(JV) that will combine the businesses of Viacom18 and Star India.

As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private Limited (“SIPL”) through a court-approved scheme of arrangement. In addition, RIL has agreed to invest at closing ?11,500 crore (US$ 1.4 billion) into the JV for its growth strategy.

The transaction values the JV at ?70,352 crore (US$ 8.5 billion) on a post-money basis, excluding synergies. Post completion of the above steps, the JV will be controlled by RIL and owned 16.34% by RIL, 46.82% by Viacom18 and 36.84% by Disney. Disney may also contribute certain additional media assets to the JV, subject to regulatory and third-party approvals.