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Parami News > Blog > Sports > Competition Commission of India flags cricket rights concerns with Disney-Reliance $8.5 billion merger | Parami News
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Competition Commission of India flags cricket rights concerns with Disney-Reliance $8.5 billion merger | Parami News

Atulya Shivam Pandey
Last updated: August 21, 2024 10:55 am
Atulya Shivam Pandey
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Competition Commission of India flags cricket rights concerns with Disney-Reliance .5 billion merger | Parami News
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According to four sources who spoke to Reuters, the Competition Commission of India (CCI) has made a preliminary determination that the proposed $8.5 billion merger between Reliance and Walt Disney’s media assets in India could adversely affect competition. The main concern is about the eventual merged firm’s control on cricket broadcasts.

This is the biggest block so far for the Disney-Reliance planned merger which targets at forming India’s largest entertainment company. It will be competing with Sony, Zee Entertainment, Netflix and Amazon with 120 TV channels and two streaming platforms.

The CCI has privately served Disney and Reliance with a notice stating their concerns about cricket broadcasting rights because it is an asset that can give them undue influence in a country of more than one billion people.

Within thirty days, they have been asked by CCI to explain why no investigation should commence.

“Cricket is their major headache,” said another source.

Mukesh Ambani controls this merged entity primarily along with other Reliance shareholders would have valuable broadcast rights for cricket matches on television as well as streaming platforms. Consequently, speculations are arising that these could potentially confer significant pricing power or influence over advertisers respectively worth billions of dollars in revenue upon such undertakings.

Reuters was declined consultations by Reliance, Disney and CCI. All sources requested anonymity due to confidentiality surrounding investigations by CCI.

Prior to its announcement in February, experts had highlighted antitrust concerns over sporting rights allocation as one area where regulators might pay close attention during any review of the proposed deal.

However, according to Reuters sources familiar with the matter, both companies have responded already to earlier queries from CCI concerning their amalgamation process by indicating willingness of surrendering some few TV channels as well as other conditions necessary for this endorsement process swift handling. In fact less than ten channels have been offered for sale apparently as part of efforts meant to ease CCI’s burden on this matter.

Despite this, both parties have been consistent in their stand on cricket. They are said to have told CCI that the broadcasting and streaming rights for cricket would only lapse after 2027 and 2028 respectively hence making it difficult to sell them currently. Moreover, they insist that selling such rights will be subject to the approval of the cricket board which may result into a delay in this process altogether.

For example, Reliance-Disney is set to buy digital broadcast as well as television rights for some of the most exciting cricket leagues amongst them is the most expensive competition called Indian Premier League.

This notification from CCI could further slow down the authorization process. The companies involved, however, can propose additional concessions in order to alleviate these concerns, according to one source.

“This is like an explicit sign that things are getting more complicated …The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough,” added another person.

According to yet another person who spoke with Reuters under anonymity terms, these issues have attracted a deadline of one month during which all parties should respond.But majorly it has got to do with how prices will fluctuate due to probable situations of buyers being unsure whether they would purchase products from an organization formed out of this merger or not.

“I am worried that the price that advertisers pay for spots during live events may increase,” said CCI.

According to Jefferies, a global financial services company, Disney and Reliance’s joint venture will lay claim to 40% of the television and streaming advertising market in India.

Cricket is by far the most popular sport in india, with approximately 1.4 billion fans. Therefore it is highly sought after by advertisers who are interested in reaching these large numbers of people.

In 2023 alone, Group M estimates showed that over $2bn was spent on sponsorship, endorsement and media related transactions within sports sectors across India, out of which astonishingly, almost 9 out of every 10 was directed towards cricket.

The merger could result in “almost an absolute control over cricket” says former head of mergers at CCI KK Sharma

In 2022 Zee and Sony attempted to build a giant $10bn TV empire in India but they also received similar warning notice from CCI. They however offered concessions by offloading three TV channels as remedial measures to address these concerns which ultimately helped them obtain approval from CCI. However, this did not prevent the collapse of the proposed combination.

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