MUMBAI: Mukesh Ambani-controlled Reliance Industries andSonyCorporation are in talks to combine their entertainment channel businesses.RILmay hold a significant minority interest in the merged entity, according to people close to the development.
In response to TOI’s queries, a Reliance spokesperson wrote back on Wednesday night, “We do not comment on media speculation and rumors. Our company evaluates various opportunities on an ongoing basis. ”Earlier that day, a Sony representative told TOI,“ We do not comment on speculation. ”
Sources said Sony is conducting due diligence and a deal could be in the works as early as next month.
While a number of deal structures may be on the table, the most favored option is said to be an all-stock one where Reliance’s entertainment business merges with Sony and Ambani gets a stake in the combined entity; instead of cash, the Japanese company gives the Indian behemoth equity.
Deal will help Sony scale up India ops, RIL expand content library
The (RIL-Sony entertainment channel) deal hasn’t reached a stage where the share-swap ratio has been finalized, ”People close to the development said when asked for details.
There has been talk in recent weeks of Ambani being keen to restructure his media businesses for strategic and financial reasons.
RIL’s entertainment channel business is run through Viacom 18 Media, a 51% – 49 % joint venture betweenTV 18Broadcast and US-basedViacom. TV 18 Broadcast is held by RIL’s Network 18 Media & Investments, is publicly listed, and has interests in both news and entertainment. Viacom 18 Media operates a host of entertainment channels such as Colors, MTV,Comedy Central, VH1 and Nickelodeon. The JV also deals with film production and content syndication.
Sony Corp through its 100% local arm Sony Pictures Networks (SPN) runs a bouquet of entertainment channels including SET, Max and Pix.
Viacom 18 Media posted revenues of about Rs 3, 665 crore and net profit of Rs (crore in 2018 – 19. SPN had revenues of Rs 6, 310 crore and profit of Rs 346 crore in the same period. Sony’s talks with Reliance come in the wake of reports of its proposed deal to merge with Subhash Chandra-owned Zee Entertainment Enterprises falling through in April 2019 due to differences over valuation.
It is unclear if HistoryTV 18 channel, which is a JV between TV 18 Broadcast and A E Networks, will be a part of the alliance with Sony.
The partnership will help Sony scale up its India operations while giving RIL access to content. Ambani said at RIL’s annual shareholder meeting in August 2019 that partnerships will be the path to grow the company’s consumer-facing business.
Such moves form part of RIL’s plan to become zero net-debt by March 2021. RIL had a net debt of Rs 2. 91 lakh crore at the end of the September quarter of fiscal 2020.
The talks follow Reliance’s launch of JioFiber, its broadband services, in September 2019 and acquisitions of regional cable TV and broadband service providers Hathway Cable & Datacom and DEN Networks .
At a time when digital media streaming is emerging as a parallel to TV viewing, the RIL-Sony deal, if it comes through, could stand to benefit Jio as it would give it access to Sony content. Major players like Netflix, Amazon Prime and Hotstar have been increasing local content in order to retain and expand their subscriber bases.
Shares of both Network 18 and TV 18 Broadcast surged on Thursday, by 19% and almost 10% respectively.