Written by Arpan Chaturvedi
NEW DELHI (Reuters) – The proposed merger of Walt Disney Co. and Reliance Plc's media assets in India could trigger intense antitrust scrutiny over the companies' market power, with lawyers saying they will There are concerns that its strong portfolio of cricket broadcast rights could influence advertisers.
The $8.5 billion merger of Disney and Reliance has created India's No. 1 TV player with 120 channels, with local rival Zee closest to it with 50 channels.
Analysts at India's Ambit Capital estimate the entity, which is majority-owned by billionaire Mukesh Ambani's Reliance, has a 35% share of India's TV viewership.
The entire television industry will be closely assessed by the Competition Commission of India (CCI), but six antitrust lawyers say cricket He said that the rights of people will attract attention.
Cricket has a passionate following in India, with many fans worshiping the players as gods. Companies spend billions of dollars acquiring broadcast rights and advertising to attract consumers to their services.
Disney holds both the Indian television and streaming rights to International Cricket Council matches, as well as the television rights to the Indian Premier League (IPL), the world's most valuable cricket tournament. Reliance owns the streaming rights to the IPL and all Indian Cricket Board matches.
KK Sharma, former head of mergers at CCI, said the Disney-Reliance merger would raise eyebrows among regulators, especially given their market power in the cricket sector. “Deep monitoring” will be required, he said.
“If I were a regulator, I would start with suspicion,” said Sharma, now a senior partner at Indian law firm Singhania & Company.
“If Disney and Reliance come together, there will be little left for cricket. Regulators are concerned about even the possibility of domination. Here, it's not just domination, it's almost absolute control over cricket. It is a kind of control.”
Disney declined to comment, while Reliance did not respond to Reuters inquiries. CCI also did not respond.
Media agency Group M estimates that India's sports industry spending will reach $1.7 billion in 2022, up 49% from the previous year. Cricket accounted for 85% of spending on sponsorship, endorsements and media.
The companies plan to approach the CCI for approval in the coming weeks. Disney and Reliance have said they hope to complete the deal by the end of this year or early 2025.
Senior Disney officials did not comment on the scrutiny the merger could face, but the company has consulted multiple antitrust lawyers and is confident the deal will receive final approval. He said he was confident.
Five other lawyers also expressed similar concerns as former CCI merger chief Sharma, saying Disney Reliance's strong grip on the cricket ecosystem would reduce the bargaining power of advertisers. He said there is a possibility.
Vaibhav Chokse, head of competition law at India's J Sagar Associates, said the companies could consider so-called “behavioral commitments” such as not adjusting advertising rates for a period of time to allay regulators' concerns. He said that in extreme cases, regulators may order restrictions. Organizations that take away certain channels and rights to cricket.
Jeffries said in the note that the Disney Reliance entity “owns India's most lucrative cricket rights, commands a 40% share of the advertising market in the TV and streaming space, and is looking to better monetize its ad inventory.” ” will become possible.
Karan Chandiok, head of competition law at India's Chandiok & Mahajan, said: “The regulator's concern regarding cricket will be that Disney Reliance units will be able to take advantage of higher rates for advertisers.” said.
Before the merger, Disney and Reliance were fierce competitors in cricket. Reliance recently offered free live streaming of Indian Premier League matches for which it paid $2.9 billion for the rights. Disney then offered free live streaming of the Cricket World Cup on mobile devices.
Antimonopoly authorities also plan to closely monitor television monopolies.
But a new media merger between India's Zee Entertainment and Japan's Sony collapsed this year, leaving more competitors in the market, which some say could make the valuation easier on the TV side. says the lawyer.
Still, lawyers said Disney Reliance could face tough conditions on some major TV channels where the two companies have a large market share of more than 40% to 50%.
According to the 2022 merger approval document between CCI Zee and Sony, the Disney-Reliance merger at that time would have had a market share of 65-75% for Marathi channels and around 50% for Bengali channels. It has been shown that
(Reporting by Arpan Chaturvedi; Editing by Aditya Kalra and Kim Coghill)
