Reliance Industries (RIL) on Friday announced a strategic merger of its digital music service JioMusic with music over-the-top platform Saavn which will see RIL acquiring a 75-80 per cent stake in the merged entity. The company said that the combined entity is valued at over $1 billion, with JioMusic’s implied valuation at $670 million.
“The integrated business will be developed into a media platform of the future with global reach, cross-border original content, an independent artist marketplace, consolidated data and one of the largest mobile advertising mediums,” RIL stated.
The organised music app market has three main players: Bharti Airtel’s Wynk, Times Internet Gaana and Saavn. With Saavn coming into RIL’s fold the country’s largest two telecom operators will now directly compete in the music app market also.
RIL said that it will also invest up to the rupee equivalent of $100 million, out of which the rupee equivalent of $20 million will be invested upfront for growth and expansion of the platform into one of the largest streaming services in the world. “The company will continue to operate the over-the-top media platform available on all app stores. The three co-founders of Saavn, Rishi Malhotra, Paramdeep Singh and Vinodh Bhat, will continue in their leadership roles and will drive growth of the combined entity,” it said in a statement. In addition, RIL is also acquiring a partial stake from the existing shareholders of Saavn for $104 million, while these shareholders retain their balance stake. The shareholder base of Saavn includes Tiger Global Management, Liberty Media and Bertelsmann, among others.
The deal will combine the streaming media expertise of Saavn with the connectivity and digital ecosystem of Jio. With a massive addressable market opportunity of over 1 billion users in India and globally, the combined entity plans to invest aggressively to accelerate growth that would benefit all aspects of the ecosystem, including users, music labels, artists and advertisers. Speaking on the transaction, Akash Ambani, director, Reliance Jio, said, “ We…believe that (Saavn’s) their highly experienced team will be instrumental in expanding Jio-Saavn…”