Reliance Industries (RIL) and Walt Disney’s announcement on Wednesday to combine into an $8.5-billion media giant will not only mark a new dawn for the domestic entertainment industry, but also for Uday Shankar, 61, a former Walt Disney executive, who will now be the vice-chairperson of the media entity.
RIL and Disney are forming a joint venture by merging Viacom18, where Shankar holds a board seat, with Star India, a company he led as CEO for thirteen years from 2007 to 2020. According to sources within the media industry, Shankar’s extensive experience uniquely equips him to navigate both the challenges and opportunities inherent in the formation of a media powerhouse like RIL-Disney within a rapidly evolving market. The joint venture’s ownership structure will see RIL holding 16.34%, Viacom18 with 46.82%, and Disney with a 36.84% ownership stake in the company.
Following the merger, Bodhi Tree Systems, the joint venture between James Murdoch and Shankar, which currently holds a 13.08% stake in Viacom18, is projected to possess a 6.12% stake in the newly formed joint venture, according to experts tracking the market said.
While lower than the roughly 7-9% that media reports had earlier indicated that Bodhi Tree Systems would have in the JV, analysts say that Shankar’s role will be significant in the new company.
“As vice-chairperson, he (Shankar) will provide strategic direction to the JV as it navigates through the media market,” Karan Taurani, senior vice-president, research at brokerage Elara Capital, said.
First up, clearing the scrutiny of the Competition Commission of India (CCI), ensuring that NCLT and shareholder approvals are sought, and completing the merger on time are crucial, as experts have indicated. On Wednesday, RIL and The Walt Disney Company expressed their hope to see the JV company operational by the end of calendar year 2024 to early 2025.
At the same time, television, digital and social media are converging and consumers are increasingly growing habituated to content that is free or costs less than $3 a month on streaming platforms, brokerage JP Morgan said in a report on Thursday.
A media veteran with over 30 years behind him, industry sources say that Shankar has the ability to identify emerging media trends well before they become standard business norms.
For instance, Shankar’s sports bets at Star India – to pick up both the Indian Premier League (IPL) digital and TV rights as well as the BCCI media rights to cover India’s bilateral home series in 2018 for a five-year term – set the stage for the next round of keenly-fought media rights auctions in 2022-23.
As a result, the value of the IPL media rights for the 2023-27 cycle, in particular, soared through the roof, touching nearly three times its 2018 value of Rs 16,347.50 crore at Rs 48,390 crore.
“By then, most media networks had understood the power of sports broadcasting, especially on digital, thanks to the growth that platforms such as Hotstar had seen in terms of subscribers,” Taurani said.
Viacom18, under the strategic direction of Shankar, bagged the IPL digital rights for Rs 23,758 crore, while Disney Star won the IPL TV rights for Rs 23,575 crore for the 2023-27 period.
As it stands now, the JV will have the TV and digital rights of all major sports properties, including the IPL, Women’s Premier League, ICC events, cricket boards of India, Australia, and South Africa, Pro Kabaddi League, Indian Super League, English Premier League, NBA, and Olympics.
It will have a combined viewership market share of 35-40% across 115 channels and two video streaming platforms. It will also command significant heft with both advertisers and content creators and is expected to be the trend setter in the domestic media market.