Mumbai: The Competition Commission of India (CCI) has expressed preliminary concerns regarding the proposed $8.5 billion merger between Reliance Industries Limited (RIL) and Walt Disney’s media assets. The CCI’s apprehensions center around the potential impact on competition, particularly concerning the merged entity’s dominance over cricket broadcast rights.
According to recent media reports, the CCI has communicated its preliminary concerns to both Reliance and Disney, requesting the companies to justify why a formal investigation should not be initiated. The primary concern is that the consolidation of cricket broadcast rights, valued in the billions of dollars, could potentially disrupt fair pricing mechanisms and grant undue control over advertising markets to the merged entity and the potential pricing challenges advertisers may face if the merger proceeds.
In response to the CCI’s scrutiny, Reliance and Disney have reportedly been asked approximately 100 detailed questions related to the merger. The companies have proposed selling around 10 television channels to alleviate market power concerns and expedite the approval process. The CCI has provided a 30-day period for the companies to address these issues and submit their responses justifying, why a formal investigation should not be initiated.
The joint venture between Reliance and Walt Disney, announced in February, aims to combine Viacom18 and Star India into an $8.5 billion media conglomerate. This merger will result in a formidable media entity with 120 television channels and two streaming platforms, significantly expanding its reach in both broadcasting and digital streaming. The transaction is projected to be finalized in either the last quarter of CY2024 or the first quarter of CY2025.
Antitrust experts have previously indicated that the merger is likely to attract considerable scrutiny due to its extensive scale and influence within the industry.
Divestment of certain television channels:
To address the concerns raised by the Competition Commission of India (CCI) regarding the potential negative impact of their merger on the media and entertainment industry, Reliance Industries Limited (RIL) and Walt Disney have proposed the divestment of certain television channels in both Hindi and regional markets. This measure aims to mitigate the CCI’s apprehensions about the combined influence of the Star and Viacom18 assets.
Industry experts point out that this scenario is not unprecedented. A similar situation occurred in 2018 when the CCI approved Walt Disney’s acquisition of Star India. At that time, Disney had secured the media rights for several significant cricket properties, including the Indian Premier League (IPL), International Cricket Council (ICC) events, Board of Control for Cricket in India (BCCI) matches, Pro Kabaddi League, and the Indian Super League.
Thus, while Reliance and Disney’s current proposed merger might appear to consolidate media rights under one entity, this is consistent with past industry practices where substantial media rights were concentrated within a single firm.
However, the issuance of notices by the antitrust regulator does not necessarily mean that the deal will be automatically halted, industry experts noted. Instead, these notices provide the parties involved with an opportunity to address the regulator’s concerns. This can be achieved through detailed explanations, additional commitments, or other corrective actions to resolve any issues raised by the regulator.
