The $8.5 billion merger between Disney and Reliance Industries has won regulatory approval from India’s competition authority, clearing the way to create the nation’s largest media company.
At the heart of the watchdog’s concerns was the combined entity’s grip on cricket rights. The Competition Commission of India (CCI) argued that most sports content in India is “streamed on either of the two platforms (of Reliance and Disney)”.
According to Reuters, Disney had a 77.7 percent share of the sports TV channel segment during 2023-24, while Reliance held 7.5 percent. Together the companies dwarf its rival Sony, which enjoyed an 8.6 percent market share.
The CCI reportedly asked the duo around 100 questions related to the merger, and expressed concerns that together the pair would be able to spend even more on cricket rights. “The combined entity would have a larger financial capacity to acquire various sports rights,” said the regulator.
This in turn raised issues around their dominance of the Indian advertising market, potentially driving up ad prices around cricket on their TV and streaming properties. “After the merger, there may not be an adequate number of competitors,” said the CCI.
Research firm Omdia found that the combined business will likely have control of around 40 percent of the total advertising market. According to GroupM, companies spent almost $2 billion in India in 2023 on sports-related media and sponsorship, with cricket accounting for 87 percent of that spend.
The two companies offered concessions to assuage the concerns, including a commitment to not raise ad prices unreasonably for streamed cricket matches, and to sell seven or eight of their non-sports TV channels. Despite their refusal to relinquish any cricket rights, the CCI cleared the merger.
Not out
The companies’ commitment to cricket is unsurprising given that the sport is central to the deal. Reliance and Disney have spent approximately $9.5 billion on cricket rights in recent years, most notably the Indian Premier League (IPL).
According to Omdia, the IPL’s current five-year contract is worth $1.2 billion per year. This means the rights have more than doubled in value since 2018, when Disney paid $2.55 billion for the full five years. Omdia calculates that IPL rights are worth $16 million per game, higher than the average $15.7 million for a Premier League football match.
Disney picked up the rights after acquiring Star India from Fox for $71 billion in 2019, and hosted the games on its Hotstar subscription service, but lost the streaming rights to Reliance-owned Viacom18 in 2022. Disney retained the TV rights, but with Viacom18 streaming IPL games for free, Hotstar lost over one-third of its subscribers in nine months.
Disney sought to offload its Indian business, agreeing to sell a 60 percent stake to Reliance, which is owned by Mukesh Ambani, considered the richest person in Asia.
Together the companies will own 120 TV channels and two streaming services, with a combined content library almost twice the size of Netflix and Amazon Prime Video in India.
Given the scale of its concerns, the speed of the CCI’s approval has come as some surprise, with closure expected within six months, subject to approval from an Indian companies tribunal.
