This Tuesday, media reported that 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.
How Did This Happen?
So far, this is the biggest setback to the planned Disney-Reliance merger that aims to create India’s biggest entertainment player further competing with the players like Sony, Zee Entertainment, Netflix and Amazon having a combined 120 TV channels and two streaming services.
It appears that the Competition Commission of India (CCI) has sent a notice to privately warn Disney and Reliance.
In this notice, they have shared its concerns regarding their grip over rights to broadcast the favorite sport of the world’s most populous country, the sources said.
Moving ahead, the CCI has asked the companies to explain why an investigation should not be ordered that too, within 30 days.
As we know that “Cricket is the biggest pain point for the CCI,” sources said.
Once the merger happens, 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.
Merger Could Harm The Competition
The scenario has raised fears over pricing power and its grip over advertisers.
On request for comment, Reliance, Disney and the CCI did not respond to requests.
The sources declined to be named concerning as the CCI process is confidential.
Prior to this, the antitrust experts had warned of the merger, which was announced in February saying it could face intense scrutiny, especially on the sporting rights issue.
When it comes to CCI, they have privately asked Reliance and Disney around 100 questions related to the merger so far.
In response, the companies have told the CCI that they are willing to sell fewer than 10 television channels to assuage concerns about market power and win an early approval, as per the sources.
Interestingly, the company had refused to relent on cricket, telling the CCI that broadcast and streaming rights will expire in 2027 and 2028.
It cannot be sold right now, and that any such move would require the cricket board’s approval, which could delay the process.
Under this development, Reliance-Disney is on the path to own digital and TV cricket rights for top leagues, including for the world’s most valuable cricket tournament, the Indian Premier League.
But now, the CCI notice may delay the approval process but the companies can still address the concerns by offering more concessions, the sources said.
Adding, “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.”
