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The merged company, which would be majority owned by Asia’s richest man Mukesh Ambani’s Reliance, would have lucrative rights worth billions of dollars for the broadcast of cricket on TV and streaming platforms, raising fears over pricing power and i
India’s antitrust body has reached an initial assessment that the $8.5 billion India merger of Reliance and Walt Disney media assets harms competition due to their power over cricket broadcast rights, four sources told Reuters on Tuesday.
It is the biggest setback so far to the planned Disney-Reliance merger which aims to create India’s biggest entertainment player which will compete with Sony, Zee Entertainment, Netflix and Amazon with a combined 120 TV channels and two streaming services.
The Competition Commission of India (CCI) has privately warned Disney and Reliance through a notice in which it has shared its concerns about their grip over rights to broadcast the favourite sport of the world’s most populous country, one of the sources said.
The CCI has asked the companies to explain within 30 days why an investigation should not be ordered.
“Cricket is the biggest pain point for the CCI,” said another source.
The merged company, which would be majority owned by Asia’s richest man Mukesh Ambani’s Reliance, would have lucrative rights worth billions of dollars for the broadcast of cricket on TV and streaming platforms, raising fears over pricing power and its grip over advertisers.
Reliance, Disney and the CCI did not respond to requests for comment. All sources declined to be named as the CCI process is confidential.
Antitrust experts had warned the merger, announced in February, could face intense scrutiny, especially on the sporting rights issue.
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 assuage concerns about market power and win an early approval, sources told Reuters.
But they had refused to relent on cricket, telling the CCI that broadcast and streaming rights will expire in 2027 and 2028 and cannot be sold right now, and that any such move would require the cricket board’s approval, which could delay the process.
The Board of Control for Cricket in India has Jay Shah, the son of Prime Minister Narendra Modi’s home minister Amit Shah, in one of its top positions as secretary.
“GETTING COMPLICATED”
Reliance-Disney will own digital and TV cricket rights for top leagues, including for the world’s most valuable cricket tournament, the Indian Premier League.
The CCI notice may delay the approval process but the companies can still address the concerns by offering more concessions, the first source said.
“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.
A second source said CCI has given the companies 30 days to respond and explain their position, and the concerns currently revolve around how advertisers could face pricing challenges if the entities are merged.
“The CCI is concerned the entity can increase rates for advertisers during live events,” said the person.
Jefferies has said the Disney-Reliance entity will have a 40% share of the advertising market in TV and streaming segments.
Cricket has a fanatical following in India, the world’s most populous country with an estimated 1.4 billion people, and matches are sought after by advertisers.
Media agency GroupM estimates spending on sports industry related sponsorship, endorsement and media totalled to near $2 billion in 2023. Cricket accounted for 87% of those spends.
The former head of mergers at the CCI, K.K. Sharma, has said the merger could lead to “almost an absolute control over cricket.”
Zee and Sony planned to create a $10 billion TV behemoth in India and in 2022 and got a similar warning notice. They offered some concessions by selling three TV channels which helped them win a CCI approval, but the merger eventually collapsed.
(Reporting by Aditya Kalra; Additional reoprting by Munsif Vengattil; Editing by Conor Humphries and Louise Heavens)
Assets of Reliance, Disney whose India media merger faces scrutiny
Below is a breakdown of their assets, including critical sports rights:
Television
* Viacom18, majority owned by Reliance, has 40 television channels, including Comedy Central, Nickelodeon and MTV.
* Disney Star, a household name in India, has about 80 channels and the brand is known for Hindi family dramas as well as Hollywood movies.
* Viacom18 has the TV rights for domestic and international cricket matches run by the Board of Control for Cricket in India. Disney has TV rights for the popular Indian Premier League (IPL) until 2027.
* Both companies’ channels span general entertainment, sports, children’s TV, documentaries and lifestyle programmes. They also cover several regional language programming.
Streaming
* Disney has the digital rights for International Cricket Council’s matches in India until 2027, while Ambani’s JioCinema now has the streaming rights for IPL until 2027 after outbidding Disney.
* Reliance’s JioCinema and Disney’s Hotstar would have a combined library of 200,000 plus hours of content that includes television dramas, movies and sport events.
* Disney’s Hotstar was the second-most downloaded video streaming app in India in 2022 after MX Player, according to a report by the Federation of Indian Chambers of Commerce and Industry and EY.
* Disney’s streaming content includes global blockbusters, movies from the Marvel universe as well as National Geographic documentaries. It streamed seven out of the top 15 most-watched original shows in India in 2022, according to a report by media consulting firm Ormax.
Top rivals
Here is a list of the other top media players in India and the sectors they dominate:
Zee Entertainment
One of the oldest media companies in India, Zee’s businesses include television broadcasting, video streaming and movie production. Its domestic broadcast portfolio consists of around 48 TV channels as well as a streaming platform.
Japan’s Sony Group in January pulled the plug on a $10 billion merger deal with Zee that had been in the works for two years, citing unresolved “closing conditions” and leadership disputes.
Sony India
In its 29th year of operation, Sony Pictures Networks India, Sony Group’s subsidiary, operates 26 channels ranging from general entertainment to sports and movies.
It says its content reaches as many as 700 million viewers in India and is available in 167 countries.
Sony also operates the video streaming platform Sony LIV in India.
Netflix
The streaming giant Netflix views India as a key market. In a recent visit to India, Netflix Co-CEO Ted Sarandos was quoted as saying that he sees its Indian subscriber base rising to 100 million over time, from around 10 million now.
Amazon Prime
Amazon Prime Video is estimated to have about 20 million users in India. Its Indian aggregation service, Channels, offers subscriptions to other global and local video streaming services.
Bennett Coleman And Company
Based in Mumbai and established in 1913, the company produces its flagship Times of India newspaper and owns a host of assets in broadcasting, publishing, radio, film and entertainment.
Sun TV Network
Dominant in south India, Sun TV operates 35 TV channels in six languages, along with 69 FM radio stations and three daily newspapers.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
