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Paramount to sell Viacom18 stake to Reliance in India exit
Reliance currently owns 57.48% stake in Viacom18, through the latter’s parent company TV18 Broadcast Ltd. This will increase to 70.49% after the deal with Paramount is completed.
Close to three decades after launching youth and music channel MTV in India, media and entertainment conglomerate Paramount Global is exiting the country, after selling its entire stake in Viacom18 to Mukesh Ambani’s Reliance Industries, underlining the rising grip of the latter on India’s entertainment and streaming industry.
In an early morning regulatory filing to the stock exchanges on Thursday, Reliance Industries said it will acquire 13.01% stake in Viacom18 Media Private Limited, held currently by Paramount, for about $517 million ( ₹4,286 crore).
The statement added that Paramount Global will continue to license content to Viacom18 after this transaction. The deal is subject to regulatory approvals and the completion of the previously announced merger of Reliance and Disney’s TV and streaming assets in India.
Reliance currently owns 57.48% stake in Viacom18, through the latter’s parent company TV18 Broadcast Ltd. This will increase to 70.49% after the deal with Paramount is completed.
The background
In 2007, TV18, then owned by media veteran Raghav Bahl, had entered into a joint venture with Paramount (then Viacom Inc). The latter’s three channels – MTV, Nickelodeon and Vh1 – were subsumed under the JV, Viacom18, which then launched its flagship Hindi general entertainment channel Colors in 2008.
Ambani’s Reliance bought out Bahl’s stake in Network18 and TV18 in 2014, while in 2018, TV18 Broadcast increased its shareholding in Viacom18 Media by buying an additional 1% for a cash consideration of $20 million, valuing Viacom18 Media at $2 billion.
A source familiar with the developments said Paramount was looking to exit since Reliance began betting aggressively on sports, since Viacom wasn’t keen on the category globally. “They were anyway being ousted by Reliance and, globally, have no interest in the sports segment. Things reached a dead end post the merger with Disney,” the person added.
The combination of Disney India and Reliance will leave little for others to do particularly on the sports front, said Anuj Gandhi, media analyst and founder of Plug and Play Entertainment, a media tech start-up. “Reliance has both an interest in and repertoire for sports. The sense is it will stick to it, leaving things like buying movies to Netflix and Amazon,” Gandhi said. The English language catalogue that Paramount already contributes to for JioCinema, will also make for dominance in the international programming category along with Disney’s Marvel library, say industry experts.
Reliance's media expansion
On 28 February, Reliance and Disney agreed to form a joint venture in India that would combine the businesses of Viacom18 and Star India. As part of the transaction, Viacom18 would be merged with Star India Pvt Ltd through a court-approved scheme of arrangement, the companies had said. In addition, Reliance agreed to invest ₹11,500 crore in the JV. The transaction values the JV at ₹70,352 crore post-money (value of a company after new capital is invested).
While Reliance will control the JV with an effective stake of 55-60%, Disney will own 36.84% and Bodhi Tree, a joint venture between Uday Shankar and James Murdoch’s Lupa Systems, will own around 6.1%. The JV will be headed by Nita M. Ambani as chairperson, with Shankar as vice chairperson providing strategic guidance.
To be sure, the Disney-Reliance JV will bring together media assets across entertainment (TV channels like Colors, Star Plus, Star GOLD) and sports (Star Sports and Sports18), besides content streaming on OTT platforms JioCinema and Hotstar, reaching out to more than 750 million viewers across India.
The combined might of Reliance and Disney could set competition up at a disadvantage as far as bargaining power for TV ad rates goes, given that they would have the biggest share of the market at 40-45%.
The merged entity will have approximately 100 TV channels, of which 70 will be Disney and the rest Viacom. As far as the streaming business goes, the combined Reliance-Disney entity will be three to four times bigger in terms of total hours of programming than Netflix, and may even look at acquiring smaller, niche language-specific entities that are struggling to survive.
Paramount's debt reduction
Paramount, the parent company of CBS, MTV, and other prominent networks, has been divesting assets, including its Simon & Schuster book publishing arm, to alleviate its debt burden. Additionally, it is considering an offer from producer David Ellison to acquire the Redstone family’s controlling interest in the company and integrate his Skydance Media studio into Paramount.
Analysts at Bloomberg Intelligence estimate that the sale of Paramount's Viacom18 stake could yield up to $550 million, which could be used to reduce the company's debt.
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First Published:14 Mar 2024, 06:27 AM IST
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