According to reports, Reliance Industries is discussing the acquisition of a 29.8% stake in Tata Play, a subscription-based satellite TV and video streaming service, from Walt Disney. The potential deal signifies the strategic move of the Mukesh Ambani-owned Indian oil-to-telecom conglomerate to strengthen its presence in India’s television distribution sector and expand the reach of its OTT platform, JioCinema. Tata Play did not respond to ET Online’s query on this development.
Potential Reliance-Tata Play Deal
Tata Sons, the holding company of the Tata group, currently holds a majority 50.2% stake in Tata Play, with Temasek, a Singapore-based fund, owning the rest of the shares. In October last year, ET reported, citing sources aware of the development, that Temasek, the Singapore-based investment firm, is in advanced talks with the Tata Group to sell its 20% stake in Tata Play to the Indian conglomerate that owns the largest stake in the direct-to-home (DTH) company.
If the negotiations between Reliance and Tata Play prove successful, it would mark the first collaboration between the Tata group and the Ambanis. Additionally, it would expand the reach of JioCinema, Reliance’s streaming platform, to Tata Play customers. Disney had initially planned to divest its shares during Tata Play’s IPO, but with the postponement of the listing, it began exploring other exit strategies.
Reliance’s Strategic Move with JioCinema on Tata Play
Sources familiar with the matter revealed that Reliance aims to offer its entire JioCinema content catalogue to Tata Play customers upon acquiring the stake.
According to Karan Taurani, an analyst at Elara Capital,
“If this is true, it does make sense for Reliance because they are already present on the MSO (multiple-system operator) side through Hathway and DEN, but DTH side they don’t have presence.”
Taurani further explained,
“In the current market environment, MSO side is losing market share to DTH, which has got a more premium customer base compared to MSO in terms of ARPUs. So, DTH has a protected base with the premium customer base and that will augur well for JioCinema to tie up and reach out to a larger subscriber base.”
He added that it would also limit the competitive intensity for Reliance, which has bundled offerings.
Bankers Assessing Disney’s Stake in Tata Play Amid Challenges
According to Business Standard, bankers are currently assessing the value of Disney’s stake in Tata Play, citing sources. Despite its significant presence in the market, satellite television broadcaster Tata Play faces challenges from competing streaming platforms like Netflix, Hotstar, JioCinema, and Amazon Prime. In the fiscal year ending March 31, 2023, Tata Play reported a loss of Rs 105 crore on revenue of Rs 4,499 crore, contrasting with the previous year’s profit of Rs 68.60 crore on revenue of Rs 4,741 crore.
Reliance to Acquire Majority Stake in Disney’s India Business
A recent report from The Wall Street Journal revealed that the Walt Disney Company has reached a preliminary agreement to sell 60 per cent of its linear TV, content, and OTT business in India to Reliance at a valuation of $3.9 billion. The transaction is expected to be announced once legal due diligence is completed.
According to the memorandum of understanding (MoU) signed between the companies, Disney will retain a 40 per cent stake in its India business, while RIL will acquire a 51 per cent stake. Bodhi Tree, a venture established by media scion James Murdoch and former Disney India chief Uday Shanker, will hold a 9 per cent stake in the TV network and OTT business. Disney’s India business valuation suffered a significant blow after Zee Entertainment Enterprises withdrew from a $1.4 billion cricket rights deal with Disney.
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