Reliance, Disney offer concessions to win antitrust approval for Indian media merger, ET BrandEquity

Disney and Reliance logos

Reliance and Walt Disney have proposed selling some channels to seek faster antitrust approval for the merger of their $8.5 billion Indian media assets, but they oppose changes to the rights they hold to broadcast cricket matches, two sources familiar with the matter said.

Antitrust experts have warned that the merger between Reliance and Disney, announced in February, could come under intense scrutiny because it would create India’s largest entertainment player, competing with Sony, Zee Entertainment, Netflix and Amazon with a combined 120 TV channels and two streaming services.

The combined company, majority-owned by Reliance, the company of Asia’s richest man, Mukesh Ambani, will also gain lucrative rights worth billions of dollars to broadcast cricket matches, which has raised concerns about pricing power and influence on advertisers.

After the Competition Commission of India (CCI) privately asked Reliance and Disney about 100 questions about the merger, the companies told the regulator that they were willing to sell some TV channels (less than 10) to address concerns about market power and seek prior approval, said the sources, who asked not to be identified.

Sources said some of the concessions on offer are for regional channels in Indian languages, where both companies could have a dominant market share.

Zee and Sony had planned to create a $10 billion TV giant in India and offered franchises by selling three TV channels in 2022. That helped them win CCI approval, but the merger ultimately fell through.

The CCI notification approving the deal, which included details of the competitive landscape, showed that in the local language of Marathi, Disney and Reliance channels had a combined market share of 65% to 75% at the time, while in Bengali-language entertainment channels, the two channels had a share of around 50%.

Disney declined to comment. Reliance and CCI did not respond to Reuters requests for comment.

CRICKET RIGHTS TROUBLE

Cricket is another sticking point in the merger process. The sport has a fanatical following in India, and the matches are coveted by advertisers.

Reliance-Disney will own the digital and television broadcast rights for top cricket leagues, including the world’s premier cricket tournament, the Indian Premier League (IPL).

Jefferies said the Disney-Reliance joint venture will have a 40 percent share of the advertising market in the television and streaming segments.

KK Sharma, former merger chief at CCI, had earlier told Reuters: “Once Disney and Reliance come together, there will be very little left of cricket… It is not just about dominance, but almost absolute control over cricket.”

The CCI is investigating the companies’ market position in the cricket rights market and has not raised any objections so far, but the companies have argued to the CCI that the rights will expire in 2027 and 2028 and cannot be sold at this time, sources said.

The companies have also expressed concerns that any sub-licensing of cricket rights to another party would require prior approval from the Cricket Board of India, which could prolong the approval process, sources said.

“The companies say nothing can be done about cricket rights,” one source said.