Reliance Says No to Sony-Viacom18 Merger (Strategic Rethink)
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Following a strategic rethink, Mukesh Ambani’s Reliance Industries has called off the proposed Sony-Viacom18 merger. Instead, the company is now keen to invest more in digital content creation.
As per the original plans and discussions that continued for about a year and a half, the Ambani owned Viacom18 were to merge with Japanese giant Sony Corp. It’s to be noted down that Reliance Network18 owns a 51% stake in Viacom 18 Media Pvt Ltd.
Sony-Viacom18 Proposed Merger Decoded:
If the deal had materialized, the Sony-Viacom18 group would house more than 60 TV channels (including 2 sports networks) and 2 video streaming services (SonyLIV and VOOT). As a result, Sony Pictures Networks India would have got the majority share (74%) and the other 26% by Viacom18 in the merged entity.
Eventually, the Reliance share would shrink to 12% in the combined entity. This was not acceptable for Reliance Group as it wanted to retain management control over the digital operations.
The proposed merger would have heated up the competition and a direct threat to Disney+ Hotstar (a merged entity of Disney and Star India).
With Jio in hand, the Reliance needs a constant flow of content (on digital platforms) as it’s now an essential part of Reliance businesses (both Jio and Fiber-to-Home). This made the Mukesh Ambani group to rethink and abandon the proposed merger.
Instead, the Reliance plans to invest aggressively by creating India’s No: 1 OTT destination and thereby grow the digital media business to take on the competition.
Definitely, when the global players like Amazon Prime and Netflix can lure Indian subscribers, why not Reliance?
Do you agree with my opinion? Share your thoughts.