To seal India merger, Disney-Reliance may need to dilute cricket dominance
Disney-Reliance face antitrust challenge on India media merger
An investigation could delay the merger timeline
Firms may need to offer selling cricket broadcast rights-lawyers
By Arpan Chaturvedi, Aditi Shah and Aditya Kalra
NEW DELHI, Aug 22 (Reuters) -The Indian antitrust body's opposition toa proposed $8.5 billion merger of the Indian media assets of Walt Disney DIS.N and Reliance RELI.NS may force the companies to sell some lucrative cricket broadcast rights or commit to advertising price caps.
Reuters reported earlier this week that the Competition Commission of India (CCI) has sent a warning notice to the companies expressing concern that the merged entity will effectively have a monopolyon cricket broadcast rights worth billions of dollars, allowing it to squeeze advertisers.
Neither the companies nor the regulator have commented as the process is confidential.
Reliance-Disney are aiming to create India's biggest entertainment player which will compete with Sony 6758.T, Netflix NFLX.O and Amazon AMZN.O with 120 TV channels and two streaming services, but cricket, which has a fanatical following in the country, is the crown jewel.
According to seven antitrust lawyers, to keep the deal alive the companies will now have to come up with structural changes to their arrangement or so-called behavioural remedies, or both, which can include selling some of their broadcast rights. The term refers to changes in how a merged entity would conduct its business.
The companies can simply sell rights of certain cricket tournaments or for a particular medium, such as TV or streaming, to meet antitrust concerns, they said.
Reliance and Disney have spent roughly $9.5 billion in recent years for TV and streaming rights for the world's richest cricket tournament, the Indian Premier League, the International Cricket Council's matches such as the one-day and T20 World Cups, and matches organised by the Indian cricket board.
Another solution the companies can offer is to commit that they will cap advertisement rates for cricket matches for a few years, so they can assure the watchdog that advertisers' interests can be protected, said the lawyers.
"What they can offer is that the rates will be fair, reasonable and non-discriminatory, or that they will not increase the rate beyond a certain percentage which accounts only for inflation," said Rahul Rai, a partner at Indian law firm Axiom5.
"The worst case is if the CCI asks for sale of some of their rights."
Disney, Reliance and the CCI did not respond to Reuters requests for comment. The companies have previously told the regulator the rights will not harm advertisers and will expire by 2027-28, when rivals can bid for them again.
NO RIGHTS, NO DEAL
Cricket rights are central to the Disney-Reliance merger.
Over the years, both companies offered free viewing of matches to attract users to some of their streaming platforms in the hope they will buy subscriptions to watch more content.
One lawyer said if there were no cricket rights, "the deal is dead".
Together, the merged Disney-Reliance entity will also own Indian broadcast rights for other sporting events including the Wimbledon tennis championship, MotoGP and the English Premier League.
Media agency GroupM estimates that companies spent nearly $2 billion in India in 2023 on sports industry related sponsorship, endorsement and media. Cricket accounted for 87% of that spending.
Reliance has already offered selling fewer than 10 TV channels - mostly in regional languages - to win the CCI approval but resisted changes to cricket rights, which irked the regulator, Reuters has reported.
Kanika Chaudhary Nayar, an antitrust partner at law firm DSK Legal, said Disney and Reliance could also possibly meet some of the concerns by selling sports TV channels that don't show cricket, and then try to retain their overall portfolio of the cricket broadcast rights.
"They can argue they are foregoing some overall sports revenue to retain cricket rights-related revenue," she said.
If the CCI is not satisfied with companies' latest offer, it can carry out a more in-depth review of the merger which can drag the approval process for months, lawyers say.
An industry source said despite the notice Disney remains confident of winning an approval without selling the rights.
K.K. Sharma, a former head of mergers at the CCI, said the deal, if approved, would create "a big fish in the broadcasting market ... and a practical monopoly on cricket advertisement revenues".
"The combined strength of the new entity would give it a clear dominant position," he said.
Additional reporting by Dhwani Pandya and Munsif Vengattil; Editing by Raju Gopalakrishnan
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
