Reliance-Disney Media Merger Faces Setback
Initial Assessment Finds Harm to Competition
The Competition Commission of India (CCI) has reached an initial assessment that the $8.5 billion media merger between Reliance and Walt Disney harms competition in the Indian market. The CCI’s primary concern is the combined entity’s dominance over cricket broadcast rights, which could lead to pricing power and a stranglehold on advertisers.
Cricket Broadcast Rights: A Major Concern
The CCI’s concerns center around the merged company’s control over cricket broadcast rights, which are highly lucrative and worth billions of dollars. This dominance could lead to anti-competitive practices, harming consumers and advertisers alike. As one source noted, “Cricket is the biggest pain point for the CCI.”
Concessions Offered, But Deemed Insufficient
Reliance and Disney have offered to sell fewer than 10 television channels to address concerns about market power and win early approval. However, the CCI has deemed these concessions insufficient, prompting the notice of investigation.
Notice of Investigation: A Precursor to Complications
The notice from the CCI indicates that the regulator believes the merger harms competition, and the offered concessions are not enough to address these concerns. As a second source noted, “The notice means that initially the CCI thinks the merger harms competition, and whatever concessions offered are not enough.”
Companies Can Still Address Concerns
While the notice is a setback, Reliance and Disney can still address the CCI’s concerns by offering more concessions. The companies have the opportunity to alleviate the regulator’s worries and potentially secure approval for the merger.
Implications for the Indian Entertainment Industry
The merger, if approved, would create India’s largest entertainment player, competing with Sony, Zee Entertainment, Netflix, and Amazon. The combined entity would have a significant presence in the market, with 120 TV channels and two streaming services.
Conclusion
The CCI’s initial assessment and notice of investigation highlight the regulatory challenges facing the Reliance-Disney media merger. While the companies can still address concerns, the setback underscores the importance of ensuring competition in the Indian entertainment industry.
