Mukesh Ambani's Reliance Industries acquires 24.9% stake in Balaji Telefilms
What's the story
Moving online, people have started ditching cable/satellite TV subscriptions for OTT (Over-the-top) content services, which deliver audio-visual media and television content via the Internet. OTT is now at the center of the merger between TV and digital video. Making a bold bet at a time like this, Reliance Industries picked up 24.9% stake for Rs. 413cr in film and TV production house Balaji Telefilms.
The Deal
RIL's investment to strengthen ALTBalaji's OTT services
Veteran actor Jeetendra-owned Balaji Telefilms' board approved the investment by Reliance Industries Limited (RIL). RIL would buy 2.52 crore equity shares at Rs. 164 each, subject to shareholder and regulatory approvals. It would allow RIL's telecom arm Jio Infocomm to access Balaji's content for use. It would speed-up Balaji's content-related initiatives, particularly for ALTBalaji, and its ability to compete with other OTT players.
Reliance Industries
RIL's focus on becoming India's content powerhouse
RIL stated the investment in content production and digital content through Balaji Telefilms "is in line with RIL's commitment to invest and grow in telecom, digital and media businesses." RIL has contributed to the creation of a digital revolution in the country by making high-speed data affordable on handheld devices, an apt environment for ALTBalaji to scale up.
Quote
Edelweiss Securities Senior Vice-President Abneesh Roy's statement
"It's a win-win for both RIL and Balaji. Balaji will get access to a lot of funds; the funding infusion will help them create better content and increase budgets for both marketing and advertising. In addition, they can access the subscriber base of Jio."
RIL Businesses
Ventured into TV business by acquiring Raghav Bahl's Network18
Billionaire Mukesh Ambani-owned Reliance Industries acquired Network18 Media & Investments in 2014 to foray into the TV and content sector. Through its subsidiary TV18, Network18 operates news channels like CNBC18 and CNBC Awaaz. It also runs a Viacom joint venture, Viacom18, including popular entertainment channels like Colors. Apart from telecommunications, RIL controls businesses in petrochemicals, refining, natural resources, textiles, and retail.
ALTBalaji
Balaji Telefilms forays into digital entertainment
Balaji Telefilms, founded in 1994, operates across TV, films, and digital platforms; it produces content in many Indian languages. It launched ALTBalaji, its subscription-based on-demand video platform, in Apr'17. ALTBalaji has garnered more than four million downloads across 80 countries. Balaji invested Rs. 40cr in ALTBalaji so far; the deal with RIL would help ALTBalaji to increase its user base.
OTT Content
Significant deal for Indian OTT industry
The RIL-Balaji Telefilms deal is expected to bolster India's OTT space and advance the growing trend of consuming media on-the-go. The number of OTT streaming devices/connections is estimated to more than double by 2021, reaching 800 million. Investments in OTT are also expected to increase digital advertising revenue by 30.8% compound annual growth rate until 2021. Currently, there are 30 OTT companies in India.