Reliance-Disney's $8.5 billion merger under scrutiny: CCI raises antitrust concerns
What's the story
The Competition Commission of India (CCI) has launched an investigation into the proposed $8.5 billion merger between Reliance Industries and Walt Disney, according to anonymous sources cited by Reuters.
The merger, announced in February 2024, aims to create India's largest entertainment company with 120 television channels and two online streaming services.
The CCI's inquiries are primarily focused on sports rights, particularly cricket rights co-owned by the merging entities due to cricket's immense popularity in India.
Merger defense
Merger's impact on competition and cricket rights
In a confidential submission to the CCI, Reliance Industries and Walt Disney defended their merger, arguing it would not harm competition.
They highlighted that the cricket rights they would co-own are set to expire in 2027-2028, opening opportunities for competitors to bid.
Reliance and Disney also said that advertisers can reach out to cricket-watching consumers on many rival platforms including YouTube.
The companies' defense underscores the significance of cricket rights in India's entertainment industry.
Market share
YouTube's role in the streaming market questioned
The CCI has also questioned why YouTube, a platform primarily hosting free and user-generated content, should be compared to paid service providers like Netflix and Disney.
In response, both Reliance and Disney argued that YouTube offers paid content and has a wide reach.
Data from Media Partners Asia revealed that in 2023, YouTube held an 88% share of India's online video market, with the remaining 12% dominated by other streaming services offering premium long-form content.
Market reshaping
Potential impact of merger on India's entertainment market
The proposed merger has raised concerns due to the potential ownership of digital and television cricket rights worth billions of dollars for top cricket tournaments and the Wimbledon tennis championship.
The CCI has requested information about which entity owns these sports rights and for how long.
If approved, the Reliance-Disney merger could significantly reshape India's $28 billion entertainment market, with analyst firm Jefferies estimating that the merged entity could control 40% of India's market share in television and streaming segments.