NCLT Approves Initial Steps For Reliance Industries' Mega-merger Involving Viacom18 and Star India

NCLT greenlights creditor meetings for Reliance's Viacom18 and Star India merger which paves the way for creating an $8.5 billion media powerhouse.

The Mumbai bench of the National Company Law Tribunal (NCLT) has taken a landmark step to merge Reliance Industries’ Viacom18, its subsidiary Digital18 with Walt Disney Star India. The division bench, comprising judicial member Kishore Vemulapalli and technical member Anu Jagmohan Singh, passed an order on May 7, directing the involved companies to call a meeting with the secured and unsecured creditors to seek approval for the merger scheme.

As part of the procedural requirements, the tribunal has appointed retired Justice Suresh Chandrakant Gupte to chair these creditor meetings. In the absence of Justice Gupte, Naina Krishnamurthy, partner at Krishnamurthy & Co., will step in. B. Narsimhan of BN Associates has been appointed as the scrutinizer for the meetings, with Venkataraman K appointed as an alternate if Narsimhan is unable to serve.

The NCLT directed the companies to submit notification of the merger scheme along with copies of the scheme to various authorities like the central government, Registrar of Companies, Income Tax Authority, GST authorities Competition Commission of India (CCI), Ministry of Corporate Affairs, and other relevant regulatory agencies. If these officials do not respond within 30 days, their silence will be interpreted as an objection to the merger.

The merger scheme will proceed in two stages: first, the transfer of Viacom18's TV and streaming assets to Digital18, followed by the demerger and transfer of these assets from Digital18 to Star India. As part of this transaction, Viacom18 will transfer the streaming platform JioCinema to Digital18 in exchange for Rs 24,186 crore, paid through the allotment of 24.18 billion fully paid-up shares of Rs 10 each. In addition, Viacom18 will transfer its media operations and services to Digital18 for Rs 2,769 crore, also in the form of shares.

Further, Digital18 will transfer Viacom18's assets to Star India by issuing a proportionate number of shares to all Digital18 shareholders and Reliance Industries Ltd (RIL) in return for a $1.4 billion fund investment. After the merger, Star India's shareholding will split among Walt Disney (36.63%), Digital18 (46.11%), and RIL (16.34%).

In a related development, the NCLT Mumbai bench approved the amalgamation of Novi Digital Entertainment, the owner of Disney+ Hotstar, with its parent company, Star India, on May 15. This consolidation further aligns with the broader merger strategy.

It is worth noting that Viacom18's shareholders include RIL and its group companies, as well as Bodhi Tree Systems, promoted by James Murdoch and Uday Shankar's Paramount Global will exit Viacom18 by selling its 13% stake to RIL for Rs 4,286 crore.

The merger application was filed on March 29, following the announcement of a deal aimed at creating an $8.5 billion media group with an influence in the linear TV and video streaming markets

Ashish K Singh, Managing Partner at Capstone Legal, confirmed that the order was an important policy milestone going into the merger. The NCLT directives not only call meetings of creditors but also provide information to tax authorities and provide detailed information on corporate commitments, early payments, pending IBC cases, litigation and financial commitments.

The merged entity, combining the strengths of Viacom18 and Star India, will operate over 100 TV channels and two streaming platforms—Disney+ Hotstar and JioCinema. This new media giant will have a combined viewership of over 750 million across India and will cater to the Indian diaspora globally.