The Competition Commission of India (CCI) has made a preliminary determination that the proposed $8.5 billion merger between Reliance and Walt Disney‘s media assets in India could adversely affect competition, according to four sources who spoke to Reuters. The main concern revolves around the combined entity’s control over cricket broadcasting rights.
This marks the most significant hurdle to date for the planned Disney-Reliance merger, which aims to create the largest entertainment company in India.The resulting entity would rival Sony, Zee Entertainment, Netflix, and Amazon, boasting a portfolio of 120 TV channels and two streaming platforms.
Sources revealed that the CCI has privately issued a notice to Disney and Reliance, outlining its apprehensions about their potential dominance over the broadcasting rights for cricket, which is immensely popular in the world’s most populous nation.
The CCI has asked that the companies provide an explanation within 30 days as to why an investigation into the matter should not be initiated.
“Cricket is the biggest pain point for the CCI,” said another source.
The combined entity, which would be primarily controlled by Mukesh Ambani’s, Asia’s wealthiest individual and Reliance boss, would possess valuable broadcasting rights for cricket matches on both television and streaming services. These rights are estimated to be worth billions of dollars, leading to apprehensions about the company’s potential pricing power and influence over advertisers.
When contacted for comments by Reuters, representatives from Reliance, Disney, and CCI did not respond. All individuals who provided information for this report requested anonymity due to the confidential nature of the CCI’s proceedings.
Prior to the merger announcement in February, antitrust specialists had cautioned that the deal could face rigorous examination, particularly regarding the allocation of sporting rights.
Reliance and Disney have responded to the CCI earlier inquiries regarding their merger, expressing their readiness to divest a small number of television channels to address market power concerns and expedite the approval process, according to sources who spoke to Reuters. The companies have reportedly offered to sell fewer than 10 channels in an effort to alleviate the watchdog’s apprehensions.
However, the companies have stood firm on their stance regarding cricket rights. They have informed the CCI that the broadcast and streaming rights for cricket are set to expire in 2027 and 2028, respectively, making it impossible to sell them at present. Furthermore, they have emphasized that any such sale would necessitate the approval of the cricket board, which could potentially delay the entire process.
Reliance-Disney is set to acquire the digital and television broadcasting rights for prominent cricket leagues, most notably the world’s richest cricket tournament, the Indian Premier League.
The approval process for the acquisition might face delays due to the notice from the CCI. However, the involved companies have the option to mitigate the raised concerns by proposing additional concessions, according to one of the sources.
“This is a precursor of things getting complicated … The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough,” added the person.
The CCI has asked the involved companies to address the concerns within a 30-day period, according to another source. The primary issue at hand relates to potential pricing difficulties that advertisers might encounter if the proposed merger proceeds.
“The CCI is concerned the entity can increase rates for advertisers during live events,” said the source.
Jefferies, a financial services company, has predicted that the joint venture between Disney and Reliance will capture a significant 40% share of the advertising market across television and streaming platforms in India.
In India, cricket enjoys an unparalleled and passionate following among its estimated 1.4 billion citizens. As a result, cricket matches are highly sought after by advertisers looking to reach a vast audience.
According to estimates by media agency GroupM, the total spending on sponsorship, endorsement, and media related to the sports industry in India amounted to nearly $2 billion in 2023. Remarkably, cricket alone accounted for a staggering 87% of these expenditures.
K.K. Sharma, the former head of mergers at the CCI, has expressed concerns that the merger could result in “almost an absolute control over cricket.”
In 2022, Zee and Sony had plans to create a massive $10 billion television empire in India. However, they received a similar warning notice from the CCI. To address the concerns, they offered concessions by divesting three TV channels, which ultimately helped them secure CCI approval. Despite this, the merger eventually fell through.
This marks the most significant hurdle to date for the planned Disney-Reliance merger, which aims to create the largest entertainment company in India.The resulting entity would rival Sony, Zee Entertainment, Netflix, and Amazon, boasting a portfolio of 120 TV channels and two streaming platforms.
Sources revealed that the CCI has privately issued a notice to Disney and Reliance, outlining its apprehensions about their potential dominance over the broadcasting rights for cricket, which is immensely popular in the world’s most populous nation.
The CCI has asked that the companies provide an explanation within 30 days as to why an investigation into the matter should not be initiated.
“Cricket is the biggest pain point for the CCI,” said another source.
The combined entity, which would be primarily controlled by Mukesh Ambani’s, Asia’s wealthiest individual and Reliance boss, would possess valuable broadcasting rights for cricket matches on both television and streaming services. These rights are estimated to be worth billions of dollars, leading to apprehensions about the company’s potential pricing power and influence over advertisers.
When contacted for comments by Reuters, representatives from Reliance, Disney, and CCI did not respond. All individuals who provided information for this report requested anonymity due to the confidential nature of the CCI’s proceedings.
Prior to the merger announcement in February, antitrust specialists had cautioned that the deal could face rigorous examination, particularly regarding the allocation of sporting rights.
Reliance and Disney have responded to the CCI earlier inquiries regarding their merger, expressing their readiness to divest a small number of television channels to address market power concerns and expedite the approval process, according to sources who spoke to Reuters. The companies have reportedly offered to sell fewer than 10 channels in an effort to alleviate the watchdog’s apprehensions.
However, the companies have stood firm on their stance regarding cricket rights. They have informed the CCI that the broadcast and streaming rights for cricket are set to expire in 2027 and 2028, respectively, making it impossible to sell them at present. Furthermore, they have emphasized that any such sale would necessitate the approval of the cricket board, which could potentially delay the entire process.
Reliance-Disney is set to acquire the digital and television broadcasting rights for prominent cricket leagues, most notably the world’s richest cricket tournament, the Indian Premier League.
The approval process for the acquisition might face delays due to the notice from the CCI. However, the involved companies have the option to mitigate the raised concerns by proposing additional concessions, according to one of the sources.
“This is a precursor of things getting complicated … The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough,” added the person.
The CCI has asked the involved companies to address the concerns within a 30-day period, according to another source. The primary issue at hand relates to potential pricing difficulties that advertisers might encounter if the proposed merger proceeds.
“The CCI is concerned the entity can increase rates for advertisers during live events,” said the source.
Jefferies, a financial services company, has predicted that the joint venture between Disney and Reliance will capture a significant 40% share of the advertising market across television and streaming platforms in India.
In India, cricket enjoys an unparalleled and passionate following among its estimated 1.4 billion citizens. As a result, cricket matches are highly sought after by advertisers looking to reach a vast audience.
According to estimates by media agency GroupM, the total spending on sponsorship, endorsement, and media related to the sports industry in India amounted to nearly $2 billion in 2023. Remarkably, cricket alone accounted for a staggering 87% of these expenditures.
K.K. Sharma, the former head of mergers at the CCI, has expressed concerns that the merger could result in “almost an absolute control over cricket.”
In 2022, Zee and Sony had plans to create a massive $10 billion television empire in India. However, they received a similar warning notice from the CCI. To address the concerns, they offered concessions by divesting three TV channels, which ultimately helped them secure CCI approval. Despite this, the merger eventually fell through.