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NCLT approves merger process for Reliance's arm Viacom18 and Star India

The merger will be done in two stages: the transfer of Viacom18's TV and streaming assets to Digital18 and the demerger and vesting of these assets from Digital18 to Star India

Disney, Reliance

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Abhijeet Kumar New Delhi

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The Mumbai bench of the National Company Law Tribunal (NCLT) has approved the merger plan involving Reliance Industries Ltd's Viacom18, its wholly-owned subsidiary Digital18, and Walt Disney's Star India, the Economic Times reported.

In a ruling on May 7, a division bench comprising judicial member Kishore Vemulapalli and technical member Anu Jagmohan Singh asked the companies to arrange a meeting with their secured and unsecured creditors to obtain approval for the merger.

The tribunal has designated retired Justice Suresh Chandrakant Gupte as the chairperson for the meetings of secured and unsecured creditors of Viacom18 and unsecured creditors of Star India, the report said.

In Justice Gupte's absence, Naina Krishna Murthy, a partner at Krishnamurthy & Co, will assume the role. B Narsimhan, proprietor of BN Associates, has been appointed as scrutineer for the creditors' meetings of both companies, with Venkataraman K serving as an alternative if Narsimhan is unavailable.

The companies were asked to serve notices, along with a copy of the merger plan, to various government bodies and regulatory authorities. Failure to respond within 30 days will be construed as no objection to the proposed scheme by the authorities, ET claimed.

Viacom18 and Star India merger


In February this year, Mukesh Ambani-owned Reliance Industries, Viacom18 Media and Walt Disney Corporation entered an agreement to form a joint venture that would merge the television and digital streaming businesses of Viacom18 and Star India and create an entertainment giant in India.

A joint statement had pointed out that the value of the joint venture at Rs 70,352 crore ($8.5 billion) was on a post-money basis, excluding synergies.

As part of the transaction, the media undertaking of Viacom18, a RIL group company, will be merged into Star India Private, a Disney-owned firm, through a court approved scheme of arrangement. RIL would invest Rs 11,500 crore ($1.4 billion) into the joint venture to fund its growth strategy post-closing.

Nita M Ambani will be the chairperson of the venture while media veteran Uday Shankar will be the vice-chairperson.

What is the plan for the Viacom18 and Disney Star merger?


The merger plan consists of two phases: The transfer of Viacom18's TV and streaming assets to Digital18, followed by the demerger and vesting of these assets from Digital18 to Star India, according to ET.

As part of the scheme, Viacom18 will transfer its streaming platform JioCinema to Digital18, which will compensate Viacom18 with Rs 24,186 crore through an allotment of fully paid-up shares. Viacom18 will also transfer its media operations to Digital18 for a consideration of Rs 2,769 crore in the form of fully paid-up shares.

According to the ET report, Digital18 will transfer Viacom18 assets to Star India, which will distribute proportionate shares among all Digital18 shareholders. Star will also allot shares to RIL for its investment of $1.4 billion. After the share allotment, Star India's ownership will be divided among Walt Disney (36.63 per cent), Digital18 (46.11 per cent), and RIL (16.34 per cent).

NCLT approval for Novi Digital merger with Star India


In a separate order dated May 15, the NCLT Mumbai bench approved the merger of Novi Digital Entertainment, the owner of Disney+ Hotstar, with its parent company, Star India, ET said.

Notably, Viacom18 has two shareholders—RIL and Bodhi Tree Systems, promoted by James Murdoch and Uday Shankar. Paramount Global has opted to sell its 13 per cent stake in Viacom18 to RIL for Rs 4,286 crore.

The application for merger approval was filed by the companies on March 29, following the announcement of the mega merger deal aimed at creating an $8.5 billion media giant with leadership positions in both linear TV and video streaming segments.

The applicant companies are required to furnish details regarding corporate and performance guarantees, contingent liabilities, pending IBC cases, litigation, letters of credit, and margin money.

Upon completion, the combined Star-Viacom18 entity will possess over 100 TV channels and two streaming platforms—Disney+ Hotstar and JioCinema—serving more than 750 million viewers across India and the global Indian diaspora.

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First Published: May 17 2024 | 12:20 PM IST

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