(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

MUMBAI - A souped-up combatant looks set to join India’s streaming wars. Industry veterans James Murdoch and Uday Shankar are close to a deal that would pump 120 billion rupees ($1.6 billion) into Viacom18, a joint venture backed by Mukesh Ambani’s Reliance Industries, a move that will reduce current partner ViacomCBS’ holding in TV18 Broadcast to 10%, per the Economic Times. That’ll add more ammunition to the battle for content, pleasing viewers but also leading to overspending.

If consummated, the investment would be the latest in a string of mergers and acquisitions to reshape the industry. Sony Pictures India and Zee Entertainment are waiting for competition clearance on their $7 billion merger to create a film powerhouse. Walt Disney’s 2019 merger with 21st Century Fox landed it Star India.

The deals are set to turbocharge what’s already a highly competitive market. Revenue from streaming services will grow 25% annually to reach $15 billion in 2030, the Confederation of Indian Industry reckons. This burgeoning part of the entertainment industry counts as many as 80 million subscriptions, up 50% year-on-year. And there are more than 40 platforms. Disney is by far the market leader, thanks to its ownership of the hugely popular Indian Premier League (IPL) cricket. 

Reliance’s potential new partners would probably shake that up. Shankar led an aggressive shopping spree of sports rights at Star, including dropping $2.6 billion on IPL cricket in 2017 while Murdoch ran the subsidiary’s parent, Fox. Those rights are up for auction again this year, with deep-pocketed players including Reliance, Sony-Zee and Amazon.com all likely to give Star a run for is money – and drive up the price. The battle for non-sports content will intensify too: Netflix, already grappling with less impressive growth in its mature home U.S. and Canadian market, looks particularly vulnerable.

Paying up for ever more expensive content under a business model where consumers can turn off as soon as an eight-week cricket tournament is over is especially risky in a price-sensitive market like India: Subscribers pay at most a third of U.S. rates, if not much less. The more platform-hopping Indian viewers engage in, the more broadcasters will be tempted to spend to try to win them over.

 

CONTEXT NEWS

- Lupa India, an investment company set up by James Murdoch and former Star India and Walt Disney executive Uday Shankar, is close to acquiring almost 40% of Viacom18, the Economic Times reported on Jan. 26 citing unnamed sources.

- The group plans to invest 120 billion rupees ($1.6 billion) in the entertainment and sports business, including through the issuance of primary shares, at a valuation of around $4 billion. Viacom18 is 51% owned TV18 Broadcast and 49% owned by ViacomCBS. After the deal, ViacomCBS’ interest will reduce to 10%.

- TV18 is a subsidiary of Mumbai-listed Network18 which is 75% owned https://www.nw18.com/shareholding by entities related to Mukesh Ambani’s Reliance Industries.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Antony Currie and Katrina Hamlin) ((For previous columns by the author, Reuters customers can click on GALANI/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | una.galani@thomsonreuters.com; Reuters Messaging: una.galani.thomsonreuters.com@reuters.net))