The Competition Commission of India (CCI) has raised concerns about the proposed $8.5 billion merger between Reliance and Disney's media assets in India, according to a Reuters report. In a significant setback for the deal, the CCI has privately informed both companies that the merger could harm competition and has asked them to justify why an investigation should not be launched.
This merger, which would give Reliance a majority stake in the combined entity, has drawn scrutiny from antitrust experts. The resulting company would hold valuable broadcasting rights to cricket matches, raising fears that it could wield significant influence over pricing and advertisers. Neither Reliance, Disney nor the CCI has commented publicly on the issue so far.
Announced in February, the merger was expected to undergo a rigorous review by the CCI. The merged entity would emerge as India's largest entertainment conglomerate, competing with other major players like Sony, Zee Entertainment, Netflix, and Amazon. It would boast 120 TV channels and two streaming platforms.
During the review process, the CCI reportedly posed around 100 questions to both Reliance and Disney concerning the merger. To address concerns about market dominance, the companies have offered to sell fewer than 10 television channels, hoping for a quicker approval, according to Reuters sources.
However, the CCI has informed the companies that cricket broadcasting and streaming rights cannot be sold until they expire in 2027 and 2028. Any sale of these rights would also require approval from the cricket board, which could delay the process. Despite these challenges, the companies still have the option to propose further concessions to alleviate CCI concerns.
"This notice indicates that the CCI believes the merger could harm competition and that the current concessions are insufficient," one source explained. The CCI has given Reliance and Disney 30 days to respond and clarify their position.
The primary concern is that the merged entity could raise advertising rates, particularly during live events. A financial analysis by Jefferies predicts that the joint venture would control around 40% of India's advertising market across television and streaming platforms.
K.K. Sharma, a former head of mergers at the CCI, expressed worries that the merger could lead to "near-total control over cricket," given the combined entity's potential dominance in sports broadcasting.
This situation is reminiscent of the 2022 Zee and Sony merger attempt, which faced similar CCI concerns. Though those companies offered concessions, including divesting three TV channels, they ultimately failed to complete the merger despite securing CCI approval.
