Tata, Bharti Groups Set To Merge DTH Operations As Streaming Disrupts Traditional TV Services: Report

The Tata and Bharti groups are in the final stages of merging their direct-to-home (DTH) businesses, Tata Play and Airtel Digital TV, through a share swap arrangement, according to sources familiar with the discussions, says a report by Economic Times. 

This comes at a time when Indian consumers are increasingly abandoning traditional television services in favour of digital streaming platforms.

The proposed structure would give Airtel a controlling stake of more than 50 per cent in the merged entity, allowing the telecommunications giant to strengthen its non-mobile revenue streams through service convergence. 

Airtel stands to gain access to Tata Play's substantial base of 19 million households, which will support its "triple play" strategy of bundling telecommunications, broadband, and DTH services.

Tata Play, formerly known as Tata Sky, currently holds the position of India's largest DTH provider. The company began as a joint venture between Tata and Rupert Murdoch's News Corp, with The Walt Disney Company later acquiring the Murdoch stake following its 2019 acquisition of 21st Century Fox.

This transaction will represent the second significant consolidation in India's DTH sector in approximately ten years, following the 2016 merger between Dish TV and Videocon d2h. 

This merger coincides with another major media consolidation -- the merger of Reliance Industries' Viacom18 and Walt Disney's Star India to create JioStar, with FY24 revenue of Rs 26,000 crore.

Both parties are expected to announce a heads of terms agreement imminently, after which due diligence will commence. Post-merger, Airtel is anticipated to hold between 52-55 per cent of the combined business, with Tata Play shareholders, including Walt Disney, retaining 45 per cent-48 per cent.

“This will be a non-binding agreement,” an executive was quoted as saying. 

“But with both sides engaged for months, they should move fast to close out all the outstanding issues. For Tata, this has been a drag, and like telecom, they are striking an alliance with a group they are comfortable with.”

The deal comes at a challenging time for Tata Play, which has seen its valuation decline significantly from its pre-pandemic level of $3 billion to approximately $1 billion, reflected in Tata Sons' April 2024 acquisition of Temasek Holding's 10 per cent stake for Rs 835 crore ($100 million). 

Airtel Digital TV currently operates as a division of Bharti Telemedia Ltd, a wholly owned subsidiary of the publicly listed Bharti Airtel. Tata Sons, the conglomerate's holding company, controls 70 per cent of Tata Play following its buyout of Temasek's stake earlier this year.