Reliance signs deal to merge JioMusic with Saavn
New Delhi: Mukesh Ambani-helmed Reliance Industries Ltd on Friday announced an integration with leading music app Saavn for its digital music service JioMusic.
In a statement, Reliance said it has executed definitive agreements for the combination of Saavn with JioMusic.
“We are delighted to announce this partnership with Saavn, and believe that their highly experienced management team will be instrumental in expanding Jio-Saavn to an extensive user base, thereby strengthening our leadership position in the Indian streaming market,” Akash Ambani, director at Reliance Jio Infocomm Ltd, said in the statement.
The combined entity is valued at over $1 billion, with JioMusic’s implied valuation at $670 million, the statement added.
Reliance will also invest up to $100 million, out of which a rupee equivalent of $20 million will be invested upfront, for growth and expansion of the platform into one of the largest streaming services in the world.
“The integrated business will be developed into a media platform of the future with global reach, cross-border original content, independent artist marketplace, consolidated data, and one of the largest mobile advertising media,” Reliance said.
Reliance is also acquiring a partial stake from existing shareholders of Saavn for $104 million. The shareholders include Tiger Global Management, Liberty Media and Bertelsmann.
The company will continue to operate the over-the-top media platform available on all app stores.
The three co-founders of Saavn—Rishi Malhotra, Paramdeep Singh and Vinodh Bhat—will continue in their leadership roles and will drive growth of the combined entity.
“Saavn has been at the forefront of the digital music revolution in India. Our partnership with Reliance reinforces our commitment to the growth of our label partners, the independent artist ecosystem, and the overall music industry globally,” said Singh, executive vice-chairman of Saavn.
The Reliance Jio-Saavn deal comes at a time when India’s audio streaming market is on the rise.
According to the FICCI-KPMG Media and Entertainment Industry Report 2017, streaming audio contributed 10% to the total mobile Internet usage in India. The year 2016 saw a spike in music streaming volume with 50-60 million active monthly users on music streaming applications.
With over 300 million Internet-enabled mobile phones in the country and fast reducing tariff rates, this volume is expected to grow rapidly.
To be sure, the latest deal only reinforces Reliance Jio’s entertainment play growing stronger by the day. Last month, the telecom company bought a 5% stake in film production and distribution studio Eros International Plc, in addition to the existing stakes it has acquired in production houses Balaji Telefilms, and Roy Kapur Films in the last eight months.
Reliance launched its LTE mobile network operator Reliance Jio in 2016. By November 2017, it accounted for a 14.5% share of India’s wireless telecom market for the second quarter of the year, besides revenues of Rs6,140 crore for the September quarter and an implied paid subscriber base of around 131 million.
“Reliance has a hugely penetrative market with Jio, which will only get bigger as time passes. How do you fuel content? So this is a step in that direction where you have a content provider for your user base which is a player who has been in this for a long period of time,” said a media analyst on condition of anonymity.
“The investment and combination of our music assets with Saavn underlines our commitment to further boost the digital ecosystem and provide unlimited digital entertainment services to consumers over a strong uninterrupted network,” Akash Ambani said.
Kalpana Pathak contributed to this story.