CCI Warns Reliance-Disney’s $8.5 Bn Merger Will Hurt Competition

Antitrust body, the Competition Commission of India (CCI), has raised preliminary concerns that the $8.5 Bn India merger of Reliance and Walt Disney media assets harms competition due to their power over cricket broadcast rights.

As per Reuters’ report, citing sources close to the matter, the CCI has privately told Disney and Reliance its view and asked the companies to explain why an investigation shouldn’t be ordered.

As a result of this deal, unfair rights worth billions of dollars for the broadcast of cricket would be vested with the merged entity which could potentially peril fair pricing power and control over advertisers, the report added. 

The CCI, earlier, privately asked Reliance and Disney around 100 questions related to the merger. The companies have told the watchdog they are willing to sell fewer than 10 television channels to allay CCI’s concerns about market power and win an early approval, it further said.

Further CCI’s concerns about the deal can be addressed by offering more concessions, the report added citing another source. However, the antitrust body doesn’t find the concessions offered adequate. As a result, it has purportedly provided a 30-day timeframe for these companies to respond and further explain their position. 

It is pertinent to note that both parties are said to be “resisting” any changes to cricket broadcast rights that the CCI flagged this time. 

Notably, the two giants have a dominant market share over channels belonging to the regional Indian language portfolio. 

It is pertinent to note that the Reliance-Star merged entity would have both digital and TV broadcast rights of almost all major cricket tournaments, including the Indian Premier League (IPL). It will have a 40% share of the advertising market in TV and streaming segments, according to brokerage firm Jefferies.

In February this year, Reliance Industries and The Walt Disney Company inked a deal to set up a joint venture (JV) that would combine the businesses of Viacom18 and Star India Private Limited.

Back then it was reported that the merged entity would be hosting over 100 TV channels and streaming platforms – Disney+ Hotstar and JioCinema, while also wielding exclusive rights to disseminate Disney’s content in India as well as Viacom18-owned sports content. Besides this, RIL said it would invest INR 11,500 Cr in the JV to fuel its growth.

On the financial front, Walt Disney earlier conveyed that it incurred over $2 Bn in charges for the second quarter of 2024 due to goodwill impairments related to Star India on account of the merger with Reliance Industries.

Experts told Inc42 earlier that the merged entity will have the content to cater to all segments of viewers and grab a big market share in the Indian media and entertainment space. Besides, it is also set to disrupt the country’s OTT landscape.

This $2 Bn dent was attributed to entering a binding agreement with Reliance Industries Limited in the quarter to contribute to Star India’s operations in a new joint venture.

Earlier in May, Reliance Industries-backed Viacom18 and Walt Disney India, in a confidential filing, sought the nod for the merger from the Competition Commission of India (CCI).

They argued before the watchdog that the combined might of the two players, especially in the cricket broadcasting space, would not “hit” advertisers.

The companies also reportedly informed the commission that the advertisers would not be disadvantaged by the merger as cricket-watching consumers could be targeted on multiple other digital platforms, including YouTube, Meta, and other social media platforms.

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