Saavn to merge with RIL’s JioMusic

Reliance Industries Ltd has agreed to combine Saavn, a music OTT (over the top) platform, with its digital music service, JioMusic.

In a statement issued on Friday evening, the company said 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 with global reach, cross-border original content, an independent artist marketplace, consolidated data and one of the largest mobile advertising mediums.

As a part of the transaction, Reliance will also invest up to $100 million for growth and expansion of the platform into one of the largest streaming services in the world. The company will continue to operate the OTT 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 role, the statement added.

In addition, Reliance is acquiring partial stake from the existing shareholders of Saavn for $104 million, while these shareholders retain their balance stake. The shareholders of Saavn include Tiger Global Management, Liberty Media and Bertelsmann, among others.

“The investment and combination of our music assets with Saavn underlines our commitment to further boost the digital ecosystem and provide unlimited digital entertainment services to consumers over a strong uninterrupted network,” said Akash Ambani, Director, Reliance Jio, in the statement.

JioMusic, a fast growing music streaming app, has sourced content from all the major Indian and international labels, with over 16 million HD songs across 20 languages. Saavn is the only streaming service to make top grossing app charts in multiple markets, including India, US, UK, Canada, UAE and Singapore, among others.

The transaction is subject to customary closing conditions.

The RIL-Saavn transaction comes a few days after e-commerce giant Amazon launched its ad-free music streaming service, Amazon Prime Music, in India. With Amazon Prime Music, the online retailer became the latest in a growing line of companies looking to tap the country's increasing appetite for digital music. A few weeks ago, Gaana, one of the biggest names in the business, had raised $115 million from Chinese Internet giant Tencent.

In India, the music streaming business is dominated by the likes of Gaana, Saavn, Wynk, and Hungama. The entry of deep-pocketed firms such as Amazon and RIL had only increase the competition and joining forces with India’s largest private sector company may work well for Saavn.

The stock price of RIL closed at Rs 892.50, down 1.72%, on Friday on the NSE.