Disney-Reliance presents concessions to secure antitrust approval for merger in India
Disney and Reliance have made some concessions to get approval from India’s competition authorities for their $8.5 billion (approximately Rs 71,288 crore) media merger, but are not willing to sell cricket broadcasting rights, the biggest prize in the deal, two sources familiar with the matter said.
Reuters reported earlier this week that the Competition Commission of India (CCI) had sent a warning notice to the companies, raising concerns that their merged entity would gain a tight grip on most of the cricket TV and streaming rights in India, which could be detrimental to advertisers.
In response, the companies have offered not to raise advertising rates unreasonably and to take it easy, the sources said.
Reliance-Disney wants to become India’s largest entertainment provider, competing with Sony, Netflix and Amazon with 120 TV channels and two streaming services. Cricket, however, is the showpiece, which has a fanatical following in the country.
Many antitrust experts said one way to get over the antitrust hurdle was to sell some of the cricket rights, for example for tournaments or a broadcast medium such as TV. However, Disney and Reliance have filed a new, closed request with the CCI indicating they are not willing to do so, said the two sources, who asked not to be named because the process is confidential.
The submissions are being reported for the first time. Reliance, Disney and the CCI did not immediately respond to questions from Reuters.
The companies have informed the CCI that they are ready to commit not to unreasonably increase advertising prices for cricket matches, the sources said.
However, the first source indicated that the companies have not committed to imposing price caps or freezing advertising rate increases for a specific period.
Antitrust experts expect that the companies will have to make structural changes to their agreements or take so-called behavioral measures, or both, to seal the deal. Examples include selling broadcasting rights and setting a cap on advertising rates.
The companies believe the cricket rights in the country, on which they have spent about $9.5 billion (approximately Rs 79,675 crore), are too lucrative to part with and are crucial to the deal, the first source said.
The CCI will likely assess the submissions and consider whether the new concessions are sufficient to address competition concerns or whether a broader investigation is needed.
Over the years, both companies have offered free contests to lure users to their streaming platforms, hoping they would subscribe to watch more content.
Jefferies has said Disney-Reliance will have a 40 percent share of the advertising market in the TV and streaming segments.
The CCI had previously privately asked Reliance and Disney about 100 questions about the merger. The companies have already told the regulator that they are willing to sell less than 10 television channels to address concerns about market power and get early approval.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
