Reliance, Disney reportedly offer to sell channels for merger approval
What's the story
Reliance Industries and The Walt Disney Company have proposed to sell a portion of their channels, to accelerate the antitrust approval process for their $8.5 billion media assets merger in India, as per Reuters. However, the companies are reportedly unwilling to modify the cricket broadcast rights they currently hold. This merger, announced in February 2024, could potentially create India's largest entertainment entity with more than 120 TV channels and two streaming services.
Market impact
Merger to intensify competition in entertainment sector
The proposed merger between Reliance and Disney is set to intensify competition in the entertainment sector. The combined entity will compete against industry giants such as Sony, Zee Entertainment, Netflix, and Amazon. Post-merger, Mukesh Ambani's Reliance will be the majority owner of this new company. This move also includes acquisition of cricket broadcast rights worth billions of dollars, raising concerns about its potential influence over pricing and advertisers.
Regulatory scrutiny
CCI queries Reliance, Disney on merger details
The Competition Commission of India (CCI) has posed nearly 100 questions to Reliance and Disney regarding their merger. In response, the companies have proposed to sell less than 10 TV channels to address market power concerns and expedite approval. The channels being considered for sale are primarily regional Indian language ones, where the two firms may have a significant market presence.
Sports rights
Cricket broadcast rights: A point of contention
Cricket broadcast rights have emerged as a contentious issue in the merger due to cricket's immense popularity in India and high advertiser demand. The merged company will hold digital and TV cricket rights for premier cricket leagues, including the Indian Premier League (IPL). Global investment banking firm Jefferies has stated that this new entity would control 40% of the advertising market across TV and streaming sectors.
Ongoing review
CCI examines market power in cricket rights
The CCI is currently reviewing the companies' market influence in cricket rights. While no issues have been raised yet, the firms have argued that these rights will expire in 2027 and 2028 and cannot be sold at this time. They also expressed concerns that sub-licensing of cricket rights to another party would need prior approvals from the Indian cricket board, potentially delaying the approval process.