- Tuesday, February 25, 2025
KK Sharma, a former head of mergers at CCI, said the combined Disney-Reliance alliance will draw regulatory examination due to the considerable market power they wield, especially in the cricket domain.
By: Shubham Ghosh
THE potential merger between Walt Disney’s and Reliance’s media assets in India may draw significant antitrust scrutiny due to concerns over their market dominance.
Legal experts have cautioned that the combined entity’s extensive portfolio of cricket broadcast rights could potentially influence advertisers, Reuters reported.
With the proposed $8.5 billion merger, the resulting entity would emerge as India’s leading TV player, boasting 120 channels, while its closest competitor, Zee, holds 50 channels.
Analysts at India’s Ambit Capital have predicted that the entity, to be majority owned by billionaire Mukesh Ambani’s Reliance would command a 35 per cent share of the country’s TV viewership.
The Competition Commission of India (CCI), the country’s chief competition regulator, will closely scrutinize the entire TV landscape, but six antitrust lawyers emphasize that cricket rights will take centrestage as regulators evaluate market share and the influence of the merged entity. Cricket commands an impassioned following in India, where players are revered like gods. Companies invest billions to secure broadcast rights or advertise their services to entice consumers.
Disney holds the TV broadcast rights for the prestigious Indian Premier League (IPL), the world’s most valuable cricket tournament, along with both TV and streaming rights for International Cricket Council (ICC) matches in India. Reliance, on the other hand, possesses streaming rights for IPL and the Indian cricket board’s rights for all matches.
KK Sharma, a former head of mergers at CCI, has suggested that the combined Disney-Reliance alliance will draw regulatory examination due to the considerable market power they wield, particularly in the cricket domain, necessitating a “deeper scrutiny”.
“If I was the regulator, I would begin with suspicion,” Sharma, now a senior partner at Indian law firm Singhania & Co., was quoted as saying by 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 an absolute control over cricket.”
Media agency GroupM estimated that sports industry expenditure in India surged to $1.7 billion in 2022, marking a 49 per cent increase from the previous year. Cricket accounted for 85 per cent of the spending on sponsorship, endorsement and media.
The companies are gearing up to seek approvals from the CCI in the upcoming weeks. Both Disney and Reliance have expressed their intent to finalise the transaction by the end of 2024 or early 2025.
While a senior source from Disney refrained from commenting on the anticipated scrutiny of the merger, they mentioned consulting numerous antitrust attorneys and expressed confidence in obtaining final clearance for the deal.
However, five other legal experts echoed concerns similar to those voiced by former CCI mergers’ head Sharma, highlighting the potential impact of the Disney-Reliance entity’s dominance in the cricket ecosystem on advertisers’ bargaining power.
Vaibhav Choukse, who heads competition law at India’s J. Sagar Associates, suggested that the companies could explore implementing “behavioral commitments,” such as refraining from adjusting advertising rates for a certain period, to address regulatory concerns. In extreme cases, regulators might mandate divestment of specific channels or cricket rights.
According to Jefferies, the Disney-Reliance entity is poised to possess the most lucrative cricketing rights in India and hold a 40 per cent share of the advertising market in both TV and streaming segments, thereby enabling superior monetization of ad inventory.
“The regulator’s concern as far as cricket is concerned will be on the advantage the Disney-Reliance entity will have on raising prices for advertisers,” said Karan Chandhiok, head of competition law at India’s Chandhiok & Mahajan, Reuters added.
Before the merger, Disney and Reliance competed closely in cricket. Reliance recently offered free live streaming of IPL matches for which it had paid $2.9 billion in rights. Later, Disney offered free live streaming of cricket World Cup on mobile devices.
The antitrust authorities will also closely look at the TV dominance.
