By Akanksha Srivastava

The combination of Viacom18 and Star India will give birth to a media giant offering advertisers an extensive array of channels to connect with consumers. However, this merger could potentially diminish advertisers' leverage in negotiating advertising prices, according to industry observers.

On February 28, 2024, The Walt Disney Company sold its India business to Mukesh Ambani’s Reliance Industries at a $3.5 billion valuation, which it bought from Rupert Murdoch for $14 billion seven years ago.

Effectively, RIL paid USD 2.2 billion (about Rs 18,000 crore) for a 63% stake in the JV.

If regulators and shareholders approve, it will create a Rs 70,000 crore-behemoth.

Shashank Srivastava, Senior Executive Officer, Marketing and Sales, Maruti Suzuki, said, “Such tie ups will have the advantage of a larger bouquet of media channels but maybe lesser price negotiating strength.”

A senior media agency leader said that while it may hurt advertisers as they might not be able to negotiate in terms of ad rates, this move will benefit the M&E industry in the longer-run.

The leader said, "Currently, the ad rates on TV are very low compared to Western countries, given the huge population in India. But with this consolidation, Viacom 18-Disney Star will be able to control higher ad rates, earn profits, and invest in the market, eventually benefiting the whole M&E industry.”

The JV will attempt to correct the TV ad rates first, which is a tough task because of earlier benchmarking.

“Look at the JioCinema rates recently announced for IPL. They are not playing along with the set market rules where one pitches lucrative ad rates in the beginning and then increases year on year. JioCinema set the base high when it comes to FCT rates for mobile and CTV, and anything above that will benefit them. You only reported how they pitched digital at an effective rate of 3X that of TV. But they know what they are sitting on. It’s a digital audience, a large part of which doesn’t go on TV and remains exclusive,” the agency leader added.

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