Reliance, Disney reportedly make concessions for antitrust approval for India merger
Reliance and Walt Disney have offered to sell some channels to gain faster approval for their $8.5 billion (approximately Rs 71,351 crore) merger of media companies in India. However, they are resisting changes to the cricket broadcasting rights they hold, according to two sources familiar with the matter.
Antitrust experts warn that the merger of Reliance and Disney, announced in February, could face heavy criticism as it creates India’s largest entertainment company, with a total of 120 TV channels and two streaming services, competing with Sony, Zee Entertainment, Netflix and Amazon.
The merged entity, majority-owned by Reliance, owned by Asia’s richest man Mukesh Ambani, will also get lucrative cricket broadcasting rights worth billions of dollars, raising fears of underpricing and advertiser control.
After the Competition Commission of India (CCI) privately asked Reliance and Disney about 100 questions about the merger, the companies have told the regulator they are willing to sell some TV channels — less than 10 — to address concerns about market power and secure early approval, the sources said, requesting anonymity.
According to the sources, some of the concessions offered relate to regional Indian language channels, where the two companies have potential to have a dominant market share.
Zee and Sony had planned to create a $10 billion (approximately Rs. 83,943 crore) TV giant in India and offered concessions by selling three TV channels in 2022. That helped them get CCI approval, but the merger ultimately failed.
The CCI notification approving the deal, which detailed the competitive landscape, showed that in the local language Marathi, Disney and Reliance channels had a combined market share of between 65 percent and 75 percent at the time. In the Bengali language entertainment channels, the two had a market share of as much as 50 percent.
Disney declined to comment. Reliance and the CCI did not respond to Reuters requests for comment.
Problems with cricket
Cricket is another bone of contention in the merger process. The sport has a fanatical following in India and matches are sought after by advertisers.
Reliance-Disney will acquire the digital and TV rights for cricket from the biggest cricket competitions, including the world’s most valuable cricket tournament, the Indian Premier League (IPL).
Jefferies said Disney-Reliance will have a 40 percent share of the advertising market in the TV and streaming segments.
KK Sharma, former head of mergers at CCI, previously told Reuters: “If Disney and Reliance merge, cricket will be almost nothing… Here there is not just dominance but almost absolute control over cricket.”
The CCI is investigating the market power of the cricket rights companies and has not raised any concerns so far. However, the companies have argued to the CCI that the rights expire in 2027 and 2028 and cannot be sold at this time, the sources said.
Moreover, the companies have raised concerns that sub-licensing cricket rights to another party would also require prior approval from the Indian Cricket Association, which could delay the approval process, the sources said.
“The companies claim nothing can be done about the cricket rights,” one of the sources said.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
