The CCI earlier privately requested Reliance and Disney round 100 questions associated to the merger. File.
| Photograph Credit score: Reuters
India’s antitrust physique, the Competitors Fee of India (CCI), has reached an preliminary evaluation that the $8.5 billion India merger of Reliance and Walt Disney media belongings harms competitors attributable to their energy over cricket broadcast rights, 4 sources instructed Reuters on Tuesday (August 20, 2024).
Within the greatest setback up to now to their deliberate merger, CCI has privately instructed Disney and Reliance its view and requested the businesses to clarify why an investigation shouldn’t be ordered, one of many sources mentioned.
“Cricket is the most important ache level for the CCI,” mentioned one of many sources.
The merged firm, which might be majority owned by Asia’s richest man Mukesh Ambani’s Reliance, would have profitable rights value billions of {dollars} for the published of cricket, elevating fears over pricing energy and its grip over advertisers.
Reliance, Disney and the CCI didn’t instantly reply to requests for remark. All sources declined to be named because the CCI course of is confidential.
Antitrust consultants had warned the merger, introduced in February, might face intense scrutiny as it’s going to create India’s greatest leisure participant which can compete with Sony , Zee Leisure, Netflix and Amazon with a mixed 120 TV channels and two streaming providers.
The CCI earlier privately requested Reliance and Disney round 100 questions associated to the merger. The businesses have instructed the watchdog they’re prepared to promote fewer than 10 tv channels to assuage issues about market energy and win an early approval, sources instructed Reuters.
However they’d refused to relent on cricket, telling the CCI that broadcast and streaming rights will expire in 2027 and 2028 and can’t be bought proper now, and that any such transfer would require the cricket board’s approval, which might delay the method.
The CCI discover could delay the approval course of however the corporations can nonetheless handle the issues by providing extra concessions, a second supply mentioned.
“This can be a precursor of issues getting sophisticated … The discover signifies that initially the CCI thinks the merger harms competitors and no matter concessions supplied will not be sufficient,” added the individual.
A 3rd supply mentioned CCI has given the businesses 30 days to reply and clarify their place, and the issues at the moment revolve round how advertisers might face pricing challenges if the entities are merged.
“The CCI is worried the entity can enhance charges for advertisers throughout stay occasions,” mentioned the third individual.
Jefferies has mentioned the Disney-Reliance entity can have a 40% share of the promoting market in TV and streaming segments.
Reliance-Disney will personal digital and TV cricket rights for prime leagues, together with for the world’s most useful cricket event, the Indian Premier League.
The previous head of mergers on the CCI, Ok.Ok Sharma, has mentioned the merger might result in “nearly an absolute management over cricket.”
Zee and Sony deliberate to create a $10 billion TV behemoth in India and in 2022 and obtained the same warning discover.
They supplied some concessions by promoting three TV channels which helped them win a CCI approval, but the merger eventually collapsed.
