The proposed merger between Reliance and Walt Disney’s media assets in India, valued at $8.5 billion, has hit a significant hurdle. The Competition Commission of India (CCI) has raised concerns about the potential impact on competition, particularly regarding the combined entity’s control over cricket broadcasting rights.
The CCI’s preliminary determination, based on information from four anonymous sources who spoke to Reuters, highlights the primary concern: the combined entity’s dominance in cricket broadcasting. This would be a major concern in India, where cricket is immensely popular and holds significant economic value. The CCI has issued a notice to Disney and Reliance, outlining its apprehensions and requesting an explanation within 30 days as to why an investigation should not be initiated.
Sources indicate that the CCI is particularly concerned about the potential pricing power the combined entity could wield over advertisers during live cricket events. They fear that the merged company, primarily controlled by Reliance boss Mukesh Ambani, could leverage its control over cricket broadcasting rights to dictate unfavorable rates for advertisers.
The CCI’s concerns are not unfounded. The combined entity would possess valuable broadcasting rights for cricket matches on both television and streaming services, estimated to be worth billions of dollars. The merger’s potential to create a dominant player in the Indian media landscape has led to concerns from both industry experts and antitrust specialists.
Reliance and Disney have acknowledged the CCI’s concerns and have offered concessions to address them. They have proposed divesting a small number of television channels to alleviate concerns about market power. However, they have maintained their stance on cricket broadcasting rights, asserting that they are set to expire in 2027 and 2028, making it impossible to sell them at present. They have also emphasized that any sale of these rights would require approval from the cricket board, potentially delaying the entire process.
The CCI’s notice has cast a shadow over the merger’s timeline, suggesting that the approval process could face delays. However, Reliance and Disney still have the option to mitigate the raised concerns by proposing additional concessions.
The CCI’s actions highlight the importance of antitrust scrutiny in mergers and acquisitions involving media assets, particularly those controlling valuable sports broadcasting rights. The outcome of the CCI’s investigation will have significant implications for the future of the Indian media landscape and the broadcasting of cricket in the country.
The CCI’s scrutiny echoes the concerns raised in 2022 when Zee and Sony planned to merge their television assets in India. The CCI issued a similar warning notice then, ultimately leading to the proposed merger’s collapse. The CCI’s continued vigilance in this area underscores the importance of maintaining a competitive media market in India.
