Disney-Reliance Merger in India Faces Hurdles Over Cricket Dominance
The Indian antitrust body has expressed apprehension regarding the merger between Disney and Reliance. It may be necessary for companies to offer cricket broadcast rights or implement advertising price caps. The merger is significantly impeded by the prominence of cricket in India.
The proposed US$8.5 billion merger of their media businesses may face difficulties, forcing the corporations to sell some lucrative cricket broadcast rights or agree to advertising price limitations.
According to Reuters, the Competition Commission of India (CCI) has filed a cautionary notice to the corporations, concerned that the merged entity will hold a monopoly on cricket broadcast rights worth billions of dollars. This could put unnecessary pressure on advertising.
The planned partnership between Reliance and Disney aims to create India's greatest entertainment empire, ready to compete with industry titans such as Sony, Netflix, and Amazon. With 120 television stations and two streaming services, the merger aims to dominate the market. However, cricket, a popular sport in India, stands out as a valuable asset in this business.
Antitrust experts believe that in order to proceed with the merger, the corporations must implement structural changes, behavioural remedies, or a combination of the two. This might include selling off certain broadcast rights, thus addressing antitrust concerns.
Reliance and Disney have invested over US$9.5 billion in recent years to gain TV and streaming rights to prominent cricket events such as the Indian Premier League and matches organised by the International Cricket Council and the Indian Cricket Board.
One possible option is for the firms to agree to cap advertisement fees for cricket matches for a set length of time. This action would reassure authorities that advertisers' interests are protected. Rahul Rai, a partner at the Indian law firm Axiom5, emphasised the necessity of providing fair, reasonable, and non-discriminatory rates to alleviate worries.
The fate of the Disney-Reliance merger is heavily dependent on cricket rights, as both firms have used cricket matches to draw consumers to their streaming services. Without these rights, the merger may not be viable.
In addition to cricket, the amalgamated entity would own broadcast rights to other major athletic events such as Wimbledon, MotoGP, and the English Premier League. Cricket has a significant impact on India's sports business, accounting for the majority of sports-related spending in the country.
Despite Reliance's readiness to relinquish several regional TV networks to placate the CCI, opposition to changing cricket rights has been a source of concern. Legal experts believe that selling non-cricket sports networks is a smart strategy to address regulatory concerns while preserving valuable cricket rights.
If the existing proposals fail to satisfy the CCI, a more thorough study of the merger might severely delay the clearance process. Industry insiders remain confident about the merger's approval, despite ongoing obstacles due to cricket dominance.
Former CCI mergers chief K.K. Sharma emphasised the merger's potential impact, stating that it would create a dominating player in the broadcasting sector with a significant influence on cricket commercial income.
Indian antitrust body raises concerns over Disney-Reliance merger
Companies may need to sell cricket broadcast rights or impose advertising price caps
Cricket's popularity in India poses a significant challenge to the merger
Source: REUTERS