120 TV channels, 2 streaming platforms: Reliance-Disney combine set to dominate media business in India

The new blockbuster in India's Rs 2.1-lakh-crore media and entertainment industry is the merger announcement of the Indian media assets of Reliance and Disney, which will bring the biggest cricket properties like the Indian Premier League (IPL) and popular shows such as Anupamaa on the TV sets of millions Indian households, under one roof.

The merged entity will offer TV viewers 120 channels with Star India's over 70 TV channels and Viacom18's 38 TV channels in 8 languages, respectively, including Colors, Star Plus, and Star Gold and sports channels such as Star Sports and Sports18.

The two companies will command a TV advertisement and subscription market share of 40 percent and 44, respectively. Their total TV market share will stand at 42 percent as of FY23, according to analyst estimates.

RIL subsidiary Viacom18 and Star India, Disney’s Indian unit, announced the merger of their businesses to create one of India’s largest TV and digital streaming platforms on February 28.

Reliance and Disney's TV viewership share in top 10 channels is estimated to be 40 percent as of 2023, according to television measurement body Broadcast Audience Research Council (BARC).

Biggest media conglomerate

"The TV industry market looks similar to the telecom market. While there are many smaller players, they cannot command much in terms of subscription and advertising revenue. It is skewed towards the top few and the other players cannot move the needle," said Nitin Menon of NV Capital.

He added that post the merger the next broadcaster in the pecking order will be a distant second in terms of ad revenue and viewership share.

While Disney Star has a strong presence in regional genres, Viacom18 is the leader in urban general entertainment channels (GEC) and this large customer base in key genres will pose a challenge for other broadcasters.

"Disney Star always had a very good presence in India's broadcasting space especially on the regional side. Now, with Reliance's backing along with additional capital, the combined entity will command a lion's share," Menon said.

TV broadcasters such as Sun TV, Zee, Sony, and others may not be able to scale up in terms of market share, leading to market share loss and challenges for other players, including the possibility of smaller channels shutting down, said Karan Taurani, senior vice-president, Elara Capital.

Star performer sports 

He added that the Reliance and Disney will also have a monopoly in sports properties which may lead to higher ad revenues.

The combine will also have the cash cow of Indian sports --- IPL airs on Star Sports and streams on JioCinema after Disney Star retained Indian sub-continent TV rights by paying Rs 23,575 crore for five years starting 2023 and India digital rights deal was acquired for Rs 20,500 crore by Viacom18.

Along with IPL, the other sports properties the combined entity will have include ICC cricket tournaments on TV and digital, Wimbledon, Pro Kabaddi League, BCCI domestic cricket, among others.

Disney and Viacom18 collectively will control around 75-80 percent of the Indian sports market across both linear TV and digital platforms, said Taurani. "This dominance in sports, primarily cricket, positions them to command a substantial share of the overall ad market, showcasing strong growth in an industry where sports is a key driver of viewership on both linear TV and digital platforms."

In 2022, media investment company GroupM estimated sports advertising expenditure on TV and digital combined at Rs 7,100 crore out of which Disney India had a contribution of 80 percent.

"Sports as a genre will be one of the biggest contributors for the merged entity. There is nothing bigger than sports especially cricket. IPL is India's Super Bowl (the annual league championship game of the National Football League which generates big ad dollars). They (Reliance and Disney) will be able to charge higher ad rates because they have big sports properties. IPL ad revenue could be higher because the dynamics have changed and they can offer combined packages," Menon said.

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IPL advertising revenues across TV and digital is estimated to be around Rs 4,700 crore for the season held in 2023 and ad rates on TV stood at around Rs 16 lakh for a 10 second slot. This year experts expect a marginal increase in TV ad rates due to IPL media rights with two different entities.

"Due to IPL's TV and digital rights being split between two different platforms, there was a big dent in the IPL revenues on TV, which could see some respite (after the Reliance and Disney merger). The ad revenue potential from IPL is expected to increase significantly with the merged entity having exclusive IPL TV and digital rights. This consolidation may result in bundled advertisement revenues," Taurani said.

One of a kind merger

He added that the merger is one of a kind and will be a big structural disruption in the media and entertainment industry in India.

"The linear TV segment is not growing more than 3-4 percent and the only respite is sports genre which is growing faster at 7-8 percent in terms of advertising. When it comes to the combined entity of Reliance and Disney, while it will be 7-8 percent revenue growth for sports (as they will dominate the sports market), there will be 4 to 5 percent overall growth. So, they could see better growth versus industry average," he added.

The combined entity has a large opportunity in the country's media and entertainment market which according to an EY-FICCI report will post a compound annual growth rate (CAGR) of 8.2 percent over 2022-2025.

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