Author: Mahak Jain, UPES
To the Point
The merger between JioCinema, operated by Viacom18 (a subsidiary of Reliance Industries), and Disney+ Hotstar represents a significant turning point in India’s rapidly evolving OTT (Over-The-Top) media landscape. This consolidation aims to combine two of the most prominent streaming platforms in India, offering a vast library of content ranging from blockbuster movies to premium sports broadcasting rights. Structured as a share-swap transaction, the merger is expected to create a dominant digital streaming entity with substantial market reach and financial muscle.
From a legal perspective, this transaction engages multiple layers of corporate and regulatory scrutiny. It must adhere to the procedural framework for mergers and amalgamations as outlined under Sections 230 to 232 of the Companies Act, 2013, including approvals from shareholders, creditors, and the National Company Law Tribunal (NCLT). Furthermore, the combined entity’s market dominance, particularly in live sports streaming and entertainment content, triggers antitrust concerns under the Competition Act, 2002, necessitating prior approval from the Competition Commission of India (CCI). The deal also raises critical issues related to valuation transparency, corporate governance, minority shareholder protection, and regulatory compliance, making it a landmark case in Indian corporate law.
Use of Legal Jargon
The proposed merger is structured as an amalgamation through a scheme of arrangement, a process governed by Sections 230–232 of the Companies Act, 2013, which requires sanction from the National Company Law Tribunal (NCLT). As part of this procedure, both companies must pass board resolutions approving the draft scheme, followed by the preparation of valuation reports by independent experts to ensure a fair share-swap ratio. The scheme must then be approved by a majority of shareholders and creditors in prescribed meetings convened under NCLT directives. Comprehensive legal and financial due diligence is essential to assess liabilities, contractual obligations, and compliance records. The merger will also trigger minority shareholder protection mechanisms, especially concerning the safeguarding of rights under Section 232(2)(c) and fair disclosure obligations under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Given the significant market power the merged entity is likely to wield, pre-merger notification and clearance from the Competition Commission of India (CCI) under Sections 5 and 6 of the Competition Act, 2002, is mandatory to evaluate potential adverse effects on market competition. In addition, since Reliance Industries is set to acquire substantial influence over Disney’s streaming and sports broadcasting operations in India, the transaction may fall within the ambit of “control” as interpreted by the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations). This could trigger disclosure obligations and possibly require an open offer, depending on how the transaction affects listed subsidiaries or affiliates in ancillary markets.
The Proof
In March 2024, a definitive agreement was executed between Reliance Industries Limited, The Walt Disney Company, and Viacom18 Media Private Limited, outlining the proposed consolidation of their respective OTT businesses in India. The transaction is aimed at combining JioCinema, operated by Viacom18, and Disney+ Hotstar, the Indian digital streaming arm of Disney, into a single unified entity. The post-merger enterprise valuation is estimated at approximately USD 8.5 billion, with Reliance Group acquiring a controlling stake of 63.16%, while Disney will retain 36.84% ownership in the restructured entity. In addition, Bodhi Tree Systems, an investment platform backed by James Murdoch and Uday Shankar, is expected to participate as a strategic investor, leveraging its prior involvement in Viacom18.
The transaction is being implemented through a share-swap arrangement, qualifying as an amalgamation under the Companies Act, 2013, thereby requiring compliance with Sections 230 to 232. This includes the submission of a composite scheme of arrangement before the jurisdictional National Company Law Tribunal (NCLT), as well as approvals from shareholders, creditors, and regulatory bodies. The deal further contemplates the transfer and consolidation of key digital media and broadcasting assets, particularly exclusive broadcasting and streaming rights for major sporting events, including the Indian Premier League (IPL) and International Cricket Council (ICC) tournaments. The strategic value of these content rights enhances the competitive positioning of the merged entity in India’s digital entertainment market.
Given the significant market concentration and asset thresholds involved, the combination is also subject to mandatory notification and approval under Section 5 of the Competition Act, 2002. The Competition Commission of India (CCI) is expected to conduct an in-depth analysis to assess any potential appreciable adverse effect on competition (AAEC) in relevant markets such as sports broadcasting and OTT services. This transaction thus represents a complex corporate restructuring with wide-reaching implications, both economically and legally, and must proceed through multiple stages of statutory compliance, regulatory review, and stakeholder scrutiny before becoming operational.
Abstract
This article provides a comprehensive legal analysis of the proposed merger between JioCinema (under Viacom18 and Reliance Industries) and Disney+ Hotstar, examining its structural and regulatory implications within the framework of Indian corporate and competition law. The transaction is emblematic of a complex cross-border amalgamation, necessitating adherence to the procedural and substantive requirements laid down under the Companies Act, 2013, including approval mechanisms under Sections 230–232, shareholder and creditor engagement, and judicial sanction by the National Company Law Tribunal (NCLT).
Further, the transaction raises pertinent legal issues concerning control and ownership, fair valuation, and the preservation of minority shareholder rights, particularly in light of its share-swap structure and the involvement of multiple domestic and international stakeholders. Given the size and scope of the merger, it also falls within the purview of the Competition Act, 2002, requiring ex-ante review and approval by the Competition Commission of India (CCI) to evaluate any likelihood of appreciable adverse effect on competition (AAEC), especially in markets such as live sports streaming and digital content distribution.
This article also draws upon key judicial precedents and prior merger control decisions to contextualize the potential legal challenges and governance concerns that may arise. By situating the deal within India’s evolving mergers and acquisitions (M&A) jurisprudence, it assesses the broader implications for corporate governance, market consolidation, and regulatory oversight in the Indian digital economy. It aims to highlight the delicate balance between business consolidation and statutory compliance in high-value strategic transactions.
Case Laws:
Miheer H. Mafatlal v. Mafatlal Industries Ltd. (1997) 1 SCC 579
In this landmark judgment, the Supreme Court clarified that when sanctioning a scheme of amalgamation under company law, the court’s role is limited to ensuring procedural compliance, transparency, and fairness. It should not substitute its commercial judgment for that of the shareholders or management unless the scheme is manifestly unfair or illegal. The court upheld the amalgamation, stating that a democratically approved scheme cannot be interfered with unless there’s fraud, illegality, or oppression.
It reinforces judicial restraint in evaluating mergers, provided statutory requirements and minority rights are protected.
Reliance Natural Resources Ltd. v. Reliance Industries Ltd. (2010) 7 SCC 1
The case involved the enforcement of a shareholder agreement relating to gas supply. The court emphasized that corporate entities must function within the framework of law and that private contracts cannot override statutory obligations or public interest. The Supreme Court upheld the sanctity of corporate structure and autonomy, stating that commercial decisions made by boards and shareholders must be respected unless in violation of law.
The principle that merger decisions, when legally executed, are valid even if contested on commercial or contractual grounds.
CCI v. Co-ordination Committee of Artists and Technicians of W.B. Film & Television (2017)
The Supreme Court held that trade associations and unions can be classified as enterprises if they engage in economic activities. Any coordinated conduct to block market access (such as denying telecast rights) amounts to anti-competitive behavior. It was ruled that the associations’ conduct violated the Competition Act as it limited consumer choice and hampered fair competition. It highlights how CCI can examine collective dominance and abuse of power, relevant for evaluating the competitive effects of the Jio–Hotstar merger.
In re Zee Entertainment Enterprises Ltd. and Sony Pictures Networks India (2022, CCI Review)
This merger involved scrutiny by the CCI to assess whether the combined entity would distort competition through control over content and distribution. The Commission examined potential vertical and horizontal overlaps, especially regarding advertising revenue and viewer market share. Though the deal was approved, the CCI imposed conditions to prevent anti-competitive outcomes, especially concerning market foreclosure and content exclusivity.
The case establishes a framework for evaluating mergers in the media and entertainment sector, setting a direct precedent for the Jio–Hotstar deal.
Conclusion
The proposed amalgamation between JioCinema and Disney+ Hotstar serves as a paradigm of how strategic business consolidation intersects with stringent regulatory compliance frameworks under Indian corporate jurisprudence. As two major players in the OTT and digital broadcasting sector converge, the transaction underscores the increasing need for synergy-driven mergers to be conducted within the parameters of corporate governance norms, statutory disclosures, and regulatory oversight.
Although the proposed merger offers significant commercial potential in terms of economies of scale, content diversification, and market penetration, its ultimate success hinges on its ability to comply with legal and procedural obligations under the Companies Act, 2013, particularly concerning board and shareholder approvals, scheme sanctioning by the NCLT, and minority shareholder safeguards. Simultaneously, the transaction must also pass the test of competition law scrutiny under the Competition Act, 2002, with the Competition Commission of India (CCI) expected to examine issues of market concentration, barriers to entry, and potential abuse of dominant position.
Moreover, considering the cross-border dimension of the deal and the involvement of foreign stakeholders, the merger may attract further regulatory compliance under FEMA (Cross Border Merger) Regulations, 2018, and related SEBI regulations in the event of any capital market implications. Transparency in valuation practices, accountability in decision-making processes, and adherence to fiduciary responsibilities will be key determinants in ensuring the deal’s legitimacy and durability. In conclusion, while the merger marks a transformative moment for India’s digital content ecosystem, its implementation must be anchored in robust legal compliance, procedural fairness, and transparent corporate governance practices. Only then can the transaction be seen not merely as a commercial consolidation, but as a legally sound and sustainable model of corporate restructuring within India’s dynamic regulatory landscape.
FAQS
Q1. Under which provision is the Jio-Hotstar merger approved in Indian law?
The merger must be sanctioned under Sections 230-232 of the Companies Act, 2013, involving tribunal (NCLT) approval.
Q2. Does the merger need CCI approval?
Yes. Since the combined market share and asset value cross the threshold under Section 5 of the Competition Act, 2002, prior CCI approval is mandatory.
Q3. What are the implications for minority shareholders?
The Companies Act mandates disclosure and approval mechanisms to protect minority interests, particularly under Section 232(2)(c), ensuring fairness in share swap ratios and terms of the scheme.
Q4. Is this a cross-border merger?
Technically, yes. Since Disney is a foreign party, the deal must also conform to the Foreign Exchange Management (Cross Border Merger) Regulations, 2018, notified by the RBI.
Q5. What happens if CCI rejects the deal?
The parties may revise the structure, propose voluntary commitments, or appeal the decision to the National Company Law Appellate Tribunal (NCLAT).
References
Foreign Exchange Management (Cross Border Merger) Regulations, 2018
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST)
Competition Act, 2002: Sections 5 and 6
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
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https://economictimes.indiatimes.com/news/new-updates/delhi-dreamer-buys-jiohotstar-com-and-now-wants-mukesh-ambanis-reliance-to-fund-his-cambridge-tuition-fee-read-letter/articleshow/114530282.cms?
https://timesofindia.indiatimes.com/technology/tech-news/reliance-is-killing-jiocinema-for-disney-hotstar-these-may-be-the-likely-three-reasons/articleshow/114422672.cms?
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https://www.lexology.com/library/detail.aspx?g=676fbba6-d3bf-4037-89a7-291d788ca677
Companies Act, 2013: Sections 230–232 – Compromises, Arrangements and Amalgamations
https://www.mca.gov.in/content/dam/mca/pdf/CompaniesAct2013.pdf
Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
