Reliance-Disney merger in India will hurt competition, says CCI
The Competition Commission of India (CCI) has raised concerns about the potential anti-competitive effects of the proposed $8.5 billion merger between Reliance and Walt Disney. The regulatory body's apprehensions stem from the possibility of this alliance dominating cricket broadcast rights, potentially leading to an imbalance in pricing power and advertising control. In response to these concerns, CCI has asked both companies to justify why a formal investigation into their merger should not be initiated.
CCI's initial assessment
The CCI's preliminary assessment suggests that the merger could be detrimental to competition due to the combined control over cricket broadcast rights. This is seen as a significant obstacle in their merger plans, with one source stating, "Cricket is the biggest pain point for the CCI." The merged entity, primarily controlled by Mukesh Ambani's Reliance, would command substantial rights for cricket broadcasting worth billions of dollars.
Merger could create India's largest entertainment entity
The proposed merger, announced in February, has been flagged by antitrust experts for potentially creating India's largest entertainment company. This new entity would compete with major players such as Sony, Zee Entertainment, Netflix, and Amazon. It would offer a combined total of 120 TV channels and two streaming services. To address CCI's concerns and secure early approval, both firms have reportedly agreed to sell fewer than 10 television channels.
CCI seeks further clarification from Reliance and Disney
The CCI has reportedly asked nearly 100 questions related to the merger from Reliance and Disney. A source informed that the notice served by CCI indicates its initial belief that the merger could harm competition, and the concessions offered so far are insufficient. The companies have been given a 30-day window to respond and clarify their stance on these issues.
Proposed changes and stake distribution
To secure CCI's approval, Disney and Reliance are reportedly considering closing down some Hindi and regional channels of Star India and Viacom18. The merger is expected to be finalized by October, with a deadline set for February 2026. Post-merger, RIL will hold a controlling stake of 56% while Disney will own a 37% share. James Murdoch and Uday Shankar's Bodhi Tree Systems will hold the remaining 7%.
