We have all heard of returning executives; they are in the news all the time. Ever heard of a returning company? That’s Star India, which is all set to return to its former boss, Uday Shankar, in less than four years of his moving on from the organisation. Late last Wednesday Reliance Industries Limited and Disney announced their much-awaited merger, heralding the creation of a US$ 8.5 billion media behemoth in India. With that, Shankar, who took over the reins of Star India in 2007 and led its stupendous transformation from a Rs 1600-crore entity to the Rs 18,000-crore media empire in his 13-year tenure, is back in the game to claim his legacy.
On February 28 Reliance Industries Limited, Viacom 18 Media Private Limited, and The Walt Disney Company signed binding definitive agreements to form a joint venture to combine the businesses of Viacom18 and Star India. As part of the transaction, the media undertaking of Viacom18 will be merged into Star India Private Limited. The transaction values the joint venture at `70,352 crore (~US$ 8.5 billion). Controlled by Mukesh Ambani-led RIL, the joint venture (JV) will be owned 16.34% by RIL, 46.82% by Viacom18 and 36.84% by Disney. In addition, RIL has agreed to invest `11,500 crore (~US$ 1.4 billion) into the merged entity towards growth. The JV will also be granted exclusive rights to distribute Disney films and productions in India, with a license to more than 30,000 Disney content assets.
With over 108 channels, two streaming platforms and two film studios, the $ 8.5 Bn juggernaut with 750 million+ viewers will command a TV advertisement and total TV market share of 40% and 42% (FY23), respectively. Its estimated OTT market share stood at ~34% in CY23, while the TV viewership share in top-10 channels (according to BARC) was ~40% (CY23), says a report by Elara Capital. For perspective, other sources peg the total TV viewership share of the JV at 32%, against Zee Entertainment’s 17% and Culver Max Entertainment (Sony)’s 7%. In terms of revenue of India’s large media businesses Google India’s FY’23 revenue stood at Rs. 28040 cr, Meta at Rs. 18308 cr, Disney-Viacom 18 combined at Rs 24,141 cr, ZEEL Rs. 8088 cr, and Sony Rs. 6684 cr.
Nita M. Ambani, wife of Mukesh Ambani, will be the Chairperson of the merged entity, and Uday Shankar will be providing strategic guidance as Vice Chairperson. Shankar has been on the Viacom 18 board since April 2023. His appointment was concurrent with the integration of Jio Cinema into Viacom18. However, his involvement with Reliance-owned Viacom18 began much earlier.
DISRUPT - THE UDAY SHANKAR WAY
It was in the backdrop of the now-scrapped Zee-Sony merger, that Uday Shankar teamed up with 21st Century Fox’s ex-CEO James Murdoch to announce their return with $1.5 billion Qatar-backed investment firm Bodhi Tree in February of 2022; just in time for the media rights renewal of all major cricketing properties, i.e. IPL, BCCI and ICC. Bodhi Tree - a strategic partnership designed to invest in consumer technology opportunities in Southeast Asia, with a particular focus on India, is run by Murdoch and Shankar as co-chairs. The firm owns 13.08% stake on a diluted basis in Viacom18.
The news about the duo planning to infuse fresh funds into Viacom18 for a significant stake, sent ripples across the industry. A few months later, Mukesh Ambani, along with Shankar, Murdoch and Paramount Global bid for the IPL Digital rights, taking it away for ~$2.7Bn. Little did anyone expect that a property acquired for nearly three times Disney’s outgo would be streamed free of cost on Jio Cinema. But the move was not an unfamiliar one for the owner of ‘Jio’ that started out as a near synonym for free. As the champion of a streaming-first future of entertainment and sports on Digital, Shankar who has voiced his discomfort with the media ‘caste system’ that discriminates against unpaid subscribers on several platforms, had also during his reign at Star streamed IPL matches free on Hotstar initially.
The rapid pace of internet adoption in India has captured the attention of global and national media and telecom giants looking for their next big set of subscribers. Disney’s acquisition of 20th Century Fox had also placed great hopes on Hotstar. However, Shankar’s clinching the IPL deal in favour of Reliance, came as a stark realisation of things to come. Without much consideration of the fact that Star’s TV business was still in a good shape, the company started evaluating strategic options for its India business. With IPL gone, the profitability-focused Burbank headquarters did not see much value in renewing HBO and Warner Bros. content deal in India. Unsurprisingly, it landed with Jio Cinema. By now many of Disney’s top executives had joined their former boss, Shankar at Viacom 18.
Uday Shankar had reportedly described the free streaming of IPL as the first of the many disruptions that would follow. Putting an end to speculations, late last December, RIL and The Walt Disney Company signed a non-binding term sheet, with an intent to finalise the high-profile merger between Viacom18 and Disney star. The proceedings culminated in the merger announcement on February 28. The transaction is subject to regulatory, shareholder and other customary approvals and is expected to be completed in the last quarter of Calendar Year 2024 or first quarter of Calendar Year 2025.
While this may have been expected, the drastic devaluation of Star India is what stands out in the entire scheme of things. In 2018 when Disney acquired Fox, Star India boasted a valuation of $15 billion. As per the terms of the RIL-Disney agreement, it has dropped significantly. The JV values Star India’s business at Rs 28,000 crore ($3.1 billion) and Viacom18 is valued at Rs 32,000 crore ($4 billion). RIL’s dominance is further underscored by the composition of the board that will comprise five RIL nominees, three Disney representatives, and two independent directors.
Industry veterans who have known and followed Uday Shankar for years are excited about what the future holds. One of the biggest changes they say could be the complete silencing of the either/or debate with the seamless fusion of TV and Digital. Before moving on to the future, it would be relevant here to take a quick look back at Mr. Shankar’s Star Act.
A LOOK BACK
Uday Shankar, a journalist by training, took over as CEO of Star India in 2007 and transformed the company’s broadcast operations, making it one of the biggest media and entertainment companies in Asia. He subsequently led 21st Century Fox’s operations throughout Asia. Shankar was appointed President of Walt Disney Asia Pacific and Chairperson - Star & Disney India after the Walt Disney Company acquired 21st Century Fox in 2019.
A believer in the power of local execution, he led Star’s aggressive foray into regional language programming, transforming it into a content powerhouse with over 30,000 hours of content every year by the time he left in 2020. He brought progressive, socially-responsible and fresh narratives to Television with shows like ‘Satyamev Jayate’ and ‘Kya Aap Paanchvi Pass Se Tez Hain’. Shankar had estimated the potential of sports on Digital, particularly cricket, much ahead of his peers. After consolidating the network’s sports offering under ‘Star Sports’, he re-introduced India to the game of Kabaddi as a television sport with the launch of Pro-Kabbadi League. ICC, IPL, and BCCI rights followed in quick logical succession. Under his visionary leadership, Star launched Hotstar – now Disney+ Hotstar – at a time when the OTT space was in its infancy and well before the proliferation of smartphones and data across the country, giving the company an edge over others.
Shankar’s next masterstroke was the acquisition of IPL TV and digital rights for Rs 16, 347.5 crore in 2017 at a 158% premium. Even before the first season of the league was broadcast in 2018, Hotstar had become the first local service to cross 100 million downloads on the Google Play Store. With the success of properties like Pro Kabbadi League (PKL), Premier Badminton League, Hockey India League and the Indian Super League (ISL), he helped even out the playing field for other sports in the country.
In December 2020, Shankar decided to move on from the company bringing his successful innings to a halt. Following the merger, speculation was rife about a clash between Disney’s rigorous process-driven approach and the characteristic entrepreneurial culture that Shankar’s Star India was known for. However, the official statement put out by him spelled his intent to pursue ‘a high impact entrepreneurial endeavour’ and “to give back”.
Having pulled this feat, Mr. Uday Shankar has established the Indian M&E industry on a firm pedestal among global media and telecom giants that are fast converging into streaming behemoths. The long-lasting impact of this development will surely be witnessed and appreciated by all, as he leads not just Viacom18 or Disney Star, but the entire ecosystem into the ‘streaming-first future of entertainment’.
