Disney-Reliance’s $8.5 billion media merger faces antitrust scrutiny

India’s antitrust regulator has expressed preliminary concerns about the proposed $8.5 billion merger of Reliance and Walt Disney’s media assets in the country, sources told Reuters on Tuesday.

The Competition Commission of India (CCI) has reportedly flagged potential harm to competition, largely due to the combined entity’s power over cricket broadcasting rights. Cricket is the most popular sport in India, the world’s most populous country.

In 2022, Disney did not win streaming rights for the 2023-2027 seasons of the lucrative Indian Premier League cricket tournament, which was shown on the Disney+ Hotstar streaming service. Paying around $3 billion each, Reliance-based Jio grabbed the streaming rights, while Disney secured only the pay-TV rights. Also in 2022, Disney Star won the Indian television and digital rights to the men’s and women’s global events organized by the International Cricket Council (ICC) from 2024 to 2027. Now, Reliance and Disney have a near-monopoly on cricket rights in India.

The CCI’s position is a significant setback for the Disney-Reliance deal, which aims to create India’s largest entertainment conglomerate. The combined company will boast 120 TV channels and two streaming services, allowing it to compete with major players such as Sony, Zee Entertainment, Netflix and Amazon.

According to Reuters sources, the antitrust watchdog privately conveyed its concerns to Disney and Reliance through a formal notice. The companies were given 30 days to explain why a full investigation should not be launched. “Cricket is the biggest issue for the CCI,” one of the sources told Reuters.

The combined entity, to be majority-owned by Reliance and its subsidiary Viacom18, headed by Asia’s richest man Mukesh Ambani, would control lucrative rights to broadcast cricket matches on TV and streaming platforms. A Reuters report suggests the combined entity would have a 40% share of the advertising market in the TV and streaming segments. “The CCI is concerned that the entity may raise rates for advertisers during live events,” a source told Reuters.

Diversity reached out to Reliance and Disney India for comment.

The formation of the new Indian giant comes after Sony Group Corporation completed more than two years of efforts to combine its Indian television and streaming businesses with local giant Zee Entertainment Enterprises Limited in a deal expected to be worth $10 billion.