Reliance buys Paramount's stake in Indian media Viacom18 for $517 million

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Mukesh Ambani's Reliance is buying Paramount Global's 13% stake in Viacom18 for $517 million as Asia's richest man broadens his entertainment business just weeks after striking a multibillion dollars deal with Disney.

The new deal will increase Reliance's stake in Viacom18, which operates dozens of TV channels as well as streaming service JioCinema, to 70.49%, Reliance said in a disclosure (PDF) to a local stock exchange. Law firm JSA Associates said late last month that it was advising the two firms for the deal.

The move follows Disney announcing plans to merge its India business with Viacom18 late last month. The two firms said their merger will create a joint venture that they value at $8.5 billion. Viacom18 also counts Bodhi Tree, an investment firm run by James Murdoch and Uday Shankar, among its backers.

The oil-to-telecom giant has become the largest force in the media business in India, home to the world's largest population, in a matter of weeks.

Ambani said last month that Reliance's deal with Disney "is a landmark agreement that heralds a new era in the Indian entertainment industry."

The joint venture stands to capture about 85% of the country's on-demand streaming service audience and about half of the TV viewers, according to analysts, posing bigger challenges to Netflix, Amazon’s Prime Video, Apple, Sony and Zee.

The merger, which is scheduled to complete by March of 2025, will have exclusive digital and broadcast rights to some of the key sporting events — including the next four years of popular cricket tournament IPL, flagship ICC events, domestic Indian cricket, FIFA World Cup, Premier League, and Wimbledon.

The combined unit will reach over 750 million viewers across India, the firms said last month. The new venture comes at a time when other large media giants are struggling in India. Sony called off the merger between its India unit and Zee Entertainment in January, ending a two-year acquisition deliberation that would have created a $10 billion media powerhouse in the South Asian market.

Disney chief executive Bob Iger said at a conference earlier this month that the firm, which is exploring sale of many of its businesses, "wanted to stay in India," where it made a big investment when it purchased the assets of 21st Century Fox.

"We're one of the biggest media companies in India. But even though it's the most populous country in the world, and we felt we want to be there because of that, we also know that there are challenges in that market. And we had an opportunity to align with Reliance, which is obviously the company that has done very well there and one that we respect," he said.

"And in doing so, end up owning part of a bigger media company. And we believe that, that not only should benefit us in terms of the bottom line, but derisk us as well there. So it's kind of the best of both worlds. We stay in the market at a significant level. We have a very good partner in Reliance, and we get to have a chance of growing a business and lowering the risk of doing so."

Paramount will continue to license its content to Viacom18, the U.S. entertainment firm disclosed in an SEC filing (PDF). Between Disney India's Hotstar and Viacom18's JioCinema, the joint venture will be home to some of the most sought-after content, including catalogs from Warner Bros., HBO, NBCUniversal and Disney.

Paramount began investing in India nearly two decades ago. MTV Networks, a unit of Paramount, founded Viacom18 in 2007. Years later, Paramount Global formed a joint venture with TV18, another media company in which Reliance eventually acquired a controlling stake.