[ad_1]
The Walt Disney Company had an India-sized twinkle in its eye as early as 1993, when it first came to the country of now 1.4 billion potential media consumers. It started small and found a distributor to broadcast some of its content over airwaves that were just opening to global capitalism.
Along with India’s market, Disney’s ambitions grew bigger. Last year EY, the accounting and consulting firm, estimated that India’s media landscape would be worth $100 billion by 2030. And Disney banked on bringing hundreds of millions of subscribers to streaming services of its own.
Those ambitions have come to a halt. On Wednesday, Disney announced it would merge its Indian operations under those of Viacom18, a part of Reliance Industries, India’s biggest conglomerate. Reliance and Viacom18 will hold 63 percent of the new whole, with Disney in the passenger seat, left with 37 percent of the joint company’s ownership. Reliance will fork over $1.4 billion to consolidate its control.
Disney is one of the biggest of companies in the world — valued at $200 billion on the stock market — but in India, it proved no match for the homegrown hero.
Disney’s adventures in India were at their high point in 2019, when it bought 21st Century Fox from the Murdoch family’s News Corp. Among Fox’s assets, Disney won TV and streaming rights to the wildly popular Indian Premier League cricket matches.
Big subscriber numbers followed, but at great cost. At its pandemic-fueled peak, Disney+ had 162 million subscribers in India, but it was losing almost $500 million worldwide in pursuit of viewers. By summer 2022, its global operations had bled more than $11 billion since the purchase of Fox and launch of Disney+.
That is when Disney ran into trouble. It was blocked by an even bigger player with an even more resilient appetite for risk. Reliance Industries, owned by Mukesh Ambani, India’s richest person, outbid its rivals and snatched away the cricket rights, for nearly $3 billion. Disney lost 11.5 million Indian subscribers in short order, while in the rest of the world it gained 800,000 new ones.
Disney is big, but Mr. Ambani’s Reliance is even bigger: With $239 billion in market capitalization, it enters any bidding war well armed. The Indian battlefield is one that Reliance knows how to play better than any other company, let alone any foreign one. Once Mr. Ambani decided to extend his reach into media, it became hard to imagine that he would not seat himself on top of the heap.
When Reliance was started, by Mr. Ambani’s father in 1958, it was a trading shop, mainly of polyester fiber. It grew into petrochemicals and now runs the world’s largest oil refinery at the port in Jamnagar, on a remote bit of India’s western coastline. Along the way it got into telecommunications and other businesses, and in 2016 it started a free-calls, cheap-data mobile network, Jio, which quickly became the world’s third largest.
JioCinema, part of a growing family of Jio properties but a relatively small platform when India’s streaming wars began, looks likely to become the new home for Disney’s content in India. At one point another rival looked ready to emerge, as the Japanese media giant Sony was seeking to expand its operations in India by buying Zee Entertainment.
With Zee, India’s first private cable-TV company, Sony would have been big enough to divide up the TV-and-digital market with Reliance-Disney. But Sony, like Disney a foreigner and prone to misjudging the intrigues within Indian businesses, backed out of its deal with Zee on Jan. 22, frustrated by the founding family’s insistence on maintaining control.
Sony’s break up with Zee seems to have made things even harder for Disney. Bloomberg reported that the estimated value of Disney’s India unit sank to $4.5 billion from $10 billion. For one thing, Zee still owes Disney for cricket licensing. Their merger’s failure also made the eventual deal look sweeter for Mr. Ambani: What would have been a landscape defined by two giants is instead looking likely to be dominated by just one.
Karan Taurani, a research analyst at Elara Capital, said Disney and Reliance already had a combined market share of about 40 to 45 percent in advertising and about the same fraction of streaming, giving them a huge edge over competitors.
“This will lead to better profitability because the content costs could come down” in both TV and streaming, Mr. Taurani said. So “you will see smaller players losing market share and some may even shut down.”
Being such a sprawling conglomerate, Reliance has a discreet advantage in the battles for media domination. It does not need content to pay for itself directly. When their subscribers are brought into their retail, telecom and credit operations, the cost of making shows looks small by comparison to combined revenue.
Brooks Barnes contributed reporting from Los Angeles.
[ad_2]
