Disney-Reliance offer concessions for India merger, but no cricket rights sale
Adds new details, source comments paragraph 7-14
By Aditya Kalra
NEW DELHI, Aug 22 (Reuters) -Disney DIS.N and Reliance RELI.NS have offered some concessions to secure an India antitrust approval for their $8.5 billion media merger, but are unwilling to sell any cricket broadcast rights, the biggest prize in the deal, two sources familiar with matter said.
Reuters reported earlier this week that the Competition Commission of India (CCI) sent a warning notice to the companies expressing concern that their merged entity will have a tight grip on most cricket rights for TV and streaming in India, and can hurt advertisers.
In their response, the companies have offered to go easy on advertising rate hikes and not increase them unreasonably, the sources said.
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.
Many antitrust experts had said that one way to clear the antitrust hurdle was to sell some cricket rights, be it for some tournaments or broadcast medium like TV, but Disney and Reliance have made a new private submission at the CCI in which they have said they are unwilling to do so, said the two sources, who declined to be named as the process is confidential.
The submissions are being reported for the first time. Reliance, Disney and the CCI did not immediately respond to Reuters queries.
The companies have told the CCI they were willing to commit they are not going to increase advertisement prices for cricket matches in any unreasonable way, said the sources.
The first source, however, added the companies have not committed to imposing any price caps or freeze on increasing ad rates for a particular period.
Antitrust experts foresee that to seal the deal the companies need to provide structural changes to their arrangement or so-called behavioural remedies, or both, which can include selling some broadcast rights and capping ad rates.
The companies believe cricket rights in the country crazy for the sport, and on which they've spent roughly $9.5 billion, are too lucrative to part with and are key to the deal, said the first source.
The CCI is likely to review the submissions and see if the new concessions are enough to assuage antitrust concerns, or a broader investigation is needed.
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.
Jefferies has said the Disney-Reliance entity will have a 40% share of the advertising market in TV and streaming segments.
The CCI earlier privately asked Reliance and Disney around 100 questions related to the merger. The companies have already told the watchdog they are willing to sell fewer than 10 television channels to assuage concerns about market power and win an early approval.
Reporting by Aditya Kalra; editing by David Evans
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