Newly merged Star India-Viacom18 to boast cash reserves of over Rs 19K cr

The newly merged Star India-Viacom18 will have over Rs 19,000 crore in cash reserves, enabling the company to invest in its digital and sports sectors, which may face short-term losses

The newly merged entity of Star India and Viacom18 will have a strong cash position of over Rs 19,000 crore, driven by Viacom18's current cash reserves and investments of Rs 7,829 crore, plus Rs 11,500 crore from Reliance Industries Ltd (RIL), The Economic Times reported on Tuesday.

However, Star is not expected to have any cash reserves at present, the report added. The cash reserve will allow Star-Viacom18 to make key investments in its digital and sports businesses, which are expected to incur losses in the short term.

RIL-Disney merger agreement

Under the agreement with Walt Disney, RIL will invest Rs 11,500 crore into Star-Viacom18, securing a 56 per cent controlling stake. Walt Disney will hold a 37 per cent stake, while Uday Shankar and James Murdoch's Bodhi Tree Systems will own the remaining 7 per cent.

This becomes crucial for the entity as it is set to face strong competition from leading streaming giants like Netflix and Amazon Prime Video.

NCLT clears merger

Last week, a two-member bench of the National Company Law Tribunal (NCLT) approved the merger, paving the way for the creation of the country's largest media empire worth over Rs 70,000 crore.

NCLT’s green signal came two days after the Competition Commission of India (CCI) approved the deal.

Mukesh Ambani welcomes Disney into Reliance family

During last week’s annual general meeting of RIL, Chairman Mukesh Ambani welcomed Walt Disney to the Reliance family and said that the merger would usher in a new era in India's entertainment industry.

Criticism over deal

The deal, announced in February, had earlier faced scrutiny over its potential to hurt competitors and advertisers. The antitrust watchdog had noted that the deal raised concerns over the control of cricket broadcasts.

Consequently, both companies assured the CCI that they would not unreasonably increase advertising rates for streamed cricket matches, Business Standard had earlier reported citing sources.

Following this, the CCI approved the proposed combination but did not provide any details.