Disney, the global entertainment giant, is making a major move in realigning its India strategy by signing a non-binding term sheet with Reliance Industries. This strategic collaboration has the potential to create one of India's biggest entertainment empires, as reported by The Economic Times.

Under the terms of the agreement, Mukesh Ambani's Reliance group, helmed by the Indian billionaire, would hold a majority stake of 51% in the merged entity through a combination of shares and cash. Disney, on the other hand, would retain a 49% stake.

The finalization of the term sheet took place during a meeting in London last week, with Kevin Mayer representing Disney and Manoj Modi acting as an advisor for Reliance. The discussions regarding the terms of the merger have been ongoing for several months.

Disney's CEO, Bob Iger, has been facing pressure from activist investor Nelson Peltz and has already made significant cuts to the company's workforce. Iger expressed a desire to strengthen Disney's presence in India and improve profitability during a recent earnings call.

Disney gained control of Hotstar, the streaming platform initially launched by Star India, through its acquisition of 21st Century Fox assets worth $71.3 billion in 2019. The integration of Hotstar has played a crucial role in Disney's efforts to achieve its ambitious goal of 300 million to 350 million overall streaming subscribers by 2024. By offering Disney+ as a low-cost add-on for Hotstar subscribers, the company managed to increase its overall Disney+ subscriptions, albeit with lower profit margins.

However, Disney faced a setback in India when its streaming service, Disney+ Hotstar, lost the rights to broadcast the highly popular Indian Premier League Cricket (IPL) to JioCinema, a streaming app owned by Reliance Jio, Paramount Global, James Murdoch, and Uday Shankar's Bodhi Tree Systems. This $2.9 billion deal led to Hotstar witnessing a decline in its subscriber base.

Disney executives admitted that their expectation of Indian subscribers' willingness to pay for premium plans had been overestimated. As a result, the company recognized that offering free cricket was a significant factor in attracting and retaining subscribers.

The merger between Disney and Reliance Industries marks a crucial step for Disney in regaining its foothold in the Indian market. It is worth highlighting that this move comes at a time when the proposed $10 billion merger between Zee Entertainment Enterprises and Sony Group Corp.'s local unit, a deal that would create the largest media amalgamation in India, is still pending after two years of negotiations.

With the merger of their Indian operations, Disney and Reliance aim to leverage their combined strengths to establish a formidable presence in India's entertainment industry. As the details are finalized and regulatory approvals obtained, the new entity promises to reshape the landscape of the Indian entertainment market, offering a wider array of content and enhanced streaming experiences for consumers.

The completion of this merger will be closely watched by industry experts and stakeholders in India and beyond, as it holds significant implications for the future of the global entertainment industry and the growing prominence of digital streaming platforms.