Reliance Industries and Walt Disney are facing significant challenges in securing antitrust approval for their $8.5 billion merger of India media assets. The deal, which would create the largest entertainment conglomerate in India, has come under intense scrutiny from the Competition Commission of India (CCI) due to concerns about market dominance and the control over lucrative cricket broadcast rights.
Proposed Concessions: Selling TV Channels
In an effort to expedite the approval process, Reliance and Disney have proposed selling off a select number of television channels—fewer than ten, according to Reuters sources close to the matter. These concessions are aimed at addressing concerns about the merged entity’s potential market power, particularly in regional Indian language channels where the two companies hold a significant share.
The proposed divestitures are reminiscent of the 2022 attempt by Zee and Sony to create a $10 billion TV giant in India. In that case, the companies offered to sell three TV channels to gain CCI approval, though the merger ultimately collapsed.
Cricket Rights: The Sticking Point
Cricket, India’s most popular sport, has emerged as a critical point of contention in the merger discussions. The combined entity of Reliance and Disney would hold digital and television rights to major cricket leagues, including the highly coveted Indian Premier League (IPL), ICC Tournaments rights and Domestic India matches rights.
This dominance has raised concerns about the potential control over the advertising market, with Jefferies estimating that the merged company could command up to 40% of the market share in TV and streaming segments.
K.K. Sharma, a former head of mergers at the CCI, highlighted the gravity of the situation, stating, “With Disney and Reliance together, hardly anything of cricket will be left … Here, it is not merely dominance but almost an absolute control over cricket.”
Cricket Rights cannot be altered
Despite the concerns, Reliance and Disney have maintained that nothing can be done about the cricket rights at this stage. The companies have argued that these rights, which are set to expire in 2027 and 2028, cannot be sold or sublicensed without prior approval from the Board of Control for Cricket in India (BCCI). This, they argue, would significantly delay the merger process.
While the CCI is currently studying the market power of the companies in relation to cricket rights, it has yet to raise specific concerns. However, the issue remains a significant hurdle in the approval process, with the companies pushing back against any demands to alter their control over cricket broadcasts.
“The companies are arguing that nothing can be done on cricket rights,” one of the sources told Reuters.
Next Steps: Awaiting CCI Decision
As Reliance and Disney continue their negotiations with the CCI, the future of the merger remains uncertain. The companies’ willingness to divest some assets demonstrates a strategic effort to gain approval, but the unresolved issue of cricket rights could still pose a significant challenge.
The CCI’s decision in this high-stakes case will not only impact the future of the Indian media landscape but also set a precedent for how dominant market players are regulated in the country.
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