Disney and Reliance to merge media businesses in India in $8.5 billion joint venture

Walt Disney and Indian conglomerate Reliance will merge their Indian businesses, the U.S. entertainment giant announced Wednesday.

The companies will be combining their respective Star India and Viacom18 units into the newly created Star India joint venture, valued at roughly $8.5 billion on a post-money basis, excluding synergies. The venture will have over 750 million viewers in the coveted Indian market, a statement said.

The transaction remains subject to regulatory, shareholder and customary approvals. The deal is expected to complete in either the last quarter of this year or the first quarter of 2025.

Following the completion of the transaction, Reliance, led by Asia's richest man Mukesh Ambani, will control the JV and inject $1.4 billion into its growth strategy. The ownership structure will comprise of a 16.34% interest for Reliance, 46.82% for Ambani's Viacom18 and 36.84% for Disney.

Ambani's wife, Nita Ambani will chair the joint venture, while Viacom18 board member Uday Shankar will serve as vice chairperson.

"India is the world's most populous market, and we are excited for the opportunities that this joint venture will provide to create long-term value for the company," Walt Disney CEO Bob Iger said.

In a separate filing, Disney said that it expects to record non-cash pre-tax impairment charges between $1.8 billion to $2.4 billion in the current quarter, roughly half of which reflect a write-down of the net assets of Star India.

The company adds that, under the current merger agreement, it will have three directors on the board of the joint venture, with RIL having five seats. Two independent directors will also be named to the board.

Entertainment companies have been vying to make inroads in the prized Indian market, with Disney seeking to retain a presence in the country despite subscriber losses over the course of last year, a recent overhaul and $5.5 billion cost-cutting initiative that will entail a 7,000 reduction in personnel.

"We're looking in an open minded way. We like being in business in India, we'd love to be able to strengthen our hand. I can't, at this point predict where that will end up," Iger told CNBC in November.

Correction: This article has been updated to correct the ownership structure of the joint venture.

Disclosure: Entities tied to Reliance Industries Chairman Mukesh Ambani have a stake in the parent company of CNBC TV-18, CNBC's local India partner.