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RIL-Disney JV may impact media shares unfavourably: Analysts

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Mumbai: The Reliance-Disney joint venture could unfavourably affect listed firms such as Zee Entertainment, Sun TV Network, Bharti Airtel, Vodafone, and other content providers, analysts said. This collaboration involving India’s biggest company is projected to strengthen Reliance-Disney’s bargaining power with advertisers and content providers while substantially enhancing Jio’s access to content.

On Thursday, shares of media and entertainment companies were mixed. Zee shares experienced a 1% decline, closing at ₹161, whereas Sun TV Network saw a 2% gain, closing at ₹619. Shares of Bharti Airtel and Vodafone each fell by half a per cent.

‘RIL-Disney JV may Impact Media Shares Unfavourably’Agencies

Other entertainment stocks – Balaji Telefilms, Eros International, Pritish Nandi Communications, and BAG Films – fell between 3% and 5%.

“The joint venture is expected to have a negative impact on Zee and Sony, as well as telecom players, because Jio will likely gain significantly superior access to content,” said Abneesh Roy, executive director – of research at Nuvama Institutional Equities. “Additionally, the merged entity’s increased bargaining power for advertising may pose challenges for competitors.”

The combined entity will form the largest media company in India and is expected to command a 40-50% share in the television advertisement market. The company will also have a significant share in digital advertisement, surpassed only by Google and Meta in India.

The media undertaking of Viacom18 will be merged into Star India if approved by the regulatory authorities. The merged entity will have more than 120 television channels and two over-the-top platforms, JioCinema and Hotstar. Additionally, it will be granted exclusive rights to distribute Disney films and productions in India and will have access to existing content libraries from both entities.“With Reliance well-known for disrupting the industry it enters, we will not be surprised to see this power deal have a material impact on the ad revenue and a faster deterioration in market share of other peers such as Zee, Sun TV, Airtel, and Vodafone,” said Manish Chowdhury, head of research, StoxBox. “The Reliance-Disney joint venture will sport the most lucrative cricketing rights in India and have a 40% share of the advertising market, opening avenues for better ad inventory monetisation and content cost reduction with lower competition.”The merged entity will have a revenue of 25,000 crore compared to 8,500 of Zee, or 7,000 crore of Sony or 4,000 crore of for Sun TV Network.

Also, the JV will be particularly strong in sports content distribution due to existing broadcasting rights and the presence of sports channels like Star Sports and Sports 18.

“This presence in multiple categories will help the entity understand and capitalize on shifts in consumer preferences and access new content at more competitive prices compared to other players in the industry, thus creating challenges for existing players like Zee, Dish, and Sun TV,” said Yashovardhan Khemka, Analyst, Abans Holding.

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