Reliance-Disney Merger, a coloration of Reliance with the Entertainment giant Walt Disney India, might attract antitrust scrutiny.
Experts have predicted that the merger of Mukesh Ambani-led Reliance Industries and Walt Disney India could attract antitrust scrutiny. The Reliance-Disney merger is set to create India’s biggest TV player with over 120 channels.
The valuation of the entity is pegged at $8.5 billion. Lawyers have flagged concerns that the combined entity’s strong portfolio of cricket broadcast rights could impact advertisers.
Reliance-Disney Merger Affects Market Share and Regulatory Scrutiny:
It has been estimated that the Reliance-Disney merger will have a 35 percent viewership share in Indian television. In the past, both Reliance and Disney have shelled out billions of dollars to win the broadcast rights to cricket tournaments.
Reliance-Disney Merger Focus on Cricket Broadcast Rights:
While the overall TV space will be closely assessed by the Competition Commission of India (CCI), six antitrust lawyers said cricket rights will be in the spotlight as the regulators examine market share and the power of the combined entity.
K.K Sharma, a former head of mergers at CCI, said the combined Disney-Reliance combo will raise eyebrows among regulators given the market power they exert, especially in the cricket segment, requiring “deeper scrutiny.”
Concerns Over Dominance in Cricket Segment:
Sharma, now a senior partner at Singhania and Co, told Reuters, “With Disney and Reliance together, hardly anything of cricket will be left. The regulator gets concerned even when there is a possibility of dominance. Here, it is not merely dominance but almost absolute control over cricket.”
Analysts and lawyers further argued that the strong grip of Disney and Reliance on the cricket viewing ecosystem could lead to advertisers having less bargaining power, attracting scrutiny from CCI.
Parallel with Zee-Sony Merger:
Could this be a repeat of the Zee-Sony merger? Reliance and Disney have a commanding presence in the television and streaming sectors.
Referring to the CCI action against the Zee-Sony merger, experts said the regulator may ask Viacom18 and Disney Star to divest channels in categories where they have market shares beyond the acceptable threshold levels, reported Economic Times.
Competition in Cricket Broadcast Rights:
Disney and Reliance have competed intensely on cricket broadcast rights. Reliance recently offered free live streaming of Indian Premier League matches whose rights it purchased for $2.9 billion. Later, Disney offered free live streaming of the Cricket World Cup on mobile devices.
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