For the past 30 years, the number one country for a growth story was China and it delivered. The country has change, there are more people making money or raised from poverty to the lower and middle income groups. The rise in income brings many new service jobs along with the manufacturing companies and the government has and continues to spend billions on new infrastructure to move people around the country. The world has decided China’s manufacturing is too expensive and has moved operations to other countries, one of those countries is India. If what happened in China happens in India, India will be growth story for the next 20 years.

In an article by Alex Travelli and Sameer Yasir of the New York Times News Service, the large companies are focusing their efforts on trying to ensure some of the growth goes into their pockets. Disney announced a joint venture with India’s biggest conglomerate – Reliance Industries in a $8.5 billion deal that will create a media powerhouse in the world’s most populous country.

Disney will merge its Indian operations with those of Viacom18, a part of Reliance Industries. Reliance and Viacom18 will hold 63% of the company and Disney 37%. Reliance will pay Disney $1.4 billion to consolidate its control. At the present time, Disney and Reliance hold 40-45% of the market share of advertising and streaming, according to Karan Taurani, a research analyst at Elara Capital.

Disney has been in India since 1993, started as a vehicle to show movies. In 2019, Disney bought 21st Century Fox which included the rights to the Premier cricket league. Disney gain subscribers but not profits and its global operations lost $11 billion since the Fox and launch of Disney+. Reliance Industries outbid Disney for cricket rights at $3 billion. Disney lost 11.5 million subscribers.

Reliance Industries as a conglomerate besides the media operations is involved in retail, telecom and credit operations as well as infrastructure companies.

Linking to dividend paying stocks, for these types of companies which you want is a very healthy market share inside a growing market. The combination of Disney and Reliance bodes well for better returns as the companies own a 40% plus market share. If the cost of bringing on a subscriber goes down and the ability to generate more fees per subscriber goes up, the merger should work very well for the companies.

There are more questions than answers, till the next time – to raising questions.