By Aditya Kalra and M. Sriram
NEW DELHI (Reuters) -Reliance Industries and Walt Disney (NYSE:DIS) have held talks to merge their Indian entertainment operations though the companies have not reached any broad agreement on structures or valuations, two people familiar with the matter said on Tuesday.
The two sides have held talks in recent weeks about a possible joint venture, which could result in Reliance acquiring a majority stake, said the first source with direct knowledge.
A merger would create one of India's biggest entertainment empires, setting it in competition with TV players like Zee Entertainment and Sony (NYSE:SONY) and streaming giants such as Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) Prime.
The companies disagree over which whether Disney or Reliance's media unit is more highly valued, the source said.
"Disney has expressed interest and Reliance is keen only if there's a controlling stake. There is no broad agreement right now," said the first source, adding that any potential deal closure was not likely in the near term.
Earlier in the day, the Economic Times newspaper reported the companies are finalising the details of a non-binding term sheet to merge their operations in India, which could see Reliance have a 51% stake.
The first source said the possible stake percentages each side could take were not yet discussed in detail.
Reliance and Disney did not immediately respond to Reuters queries.
Indian billionaire Mukesh Ambani's Reliance runs many TV channels and JioCinema streaming app through its media and entertainment unit Viacom18. Ambani has been locked in fierce battle with Disney by offering free streaming of Indian Premier League cricket tournament, whose digital rights were once with Disney in India.
That move sparked a user exodus from Disney's streaming app Hotstar in recent quarters. Since early this year, Disney has been exploring a sale or joint venture partnership for its India business, which includes many TV channels.
The U.S. firm in a new strategy also started offering free streaming of some cricket matches on smartphones, hoping to boost advertising revenue.
In November, Disney CEO Bob Iger said "we're considering our options there (India). We have an opportunity to strengthen our hand ... We’d like to stay in that market."