CCI Flags Reliance-Disney $8.5B Merger: Competition at Risk Over Cricket Rights

NEW DELHI – India’s antitrust authority, the Competition Commission of India (CCI), has expressed initial concerns that the $8.5 billion merger between Reliance and Walt Disney’s media assets could harm competition, particularly due to their combined control over cricket broadcast rights, according to four sources who spoke to Reuters on Tuesday.

Setback for Merger Plan

This development marks a significant setback for the merger plan. The CCI has privately informed Disney and Reliance about its concerns and has asked the companies to justify why an investigation into the merger should not be initiated, one of the sources revealed.

Lack of Response from Companies

As of now, neither Reliance, Disney, nor the CCI have responded to requests for comments. All sources who provided this information declined to be named, as the CCI’s proceedings are confidential.

Cricket Rights at the Centre of Concerns

One source stated, “Cricket is the biggest pain point for the CCI.” The merged entity, which would be primarily owned by Mukesh Ambani’s Reliance, is set to hold valuable cricket broadcasting rights worth billions of dollars. This could lead to concerns over the merged company’s pricing power and its dominance over advertisers.

Potential Impact on Market Competition

Antitrust experts had previously cautioned that the merger, announced in February, might face significant scrutiny. The merger would create India’s largest entertainment company, competing with Sony, Zee Entertainment, Netflix, and Amazon, with a combined portfolio of 120 TV channels and two streaming services.

Companies Offer Concessions

The CCI had earlier sent around 100 questions to Reliance and Disney regarding the merger. According to sources, the companies have indicated to the CCI that they are willing to sell fewer than 10 television channels to alleviate concerns about market dominance and to secure quicker approval.

More Concessions May Be Needed

However, a second source noted that the companies might need to offer more concessions to address the CCI’s concerns. “The notice for now is a precursor of things getting complicated,” the source said.

30-Day Response Window

“The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough,” added the source. A third source mentioned that the CCI has given the companies 30 days to respond and clarify their position regarding the concerns raised.