Detailed Inquiry from CCI
The Competition Commission of India (CCI) has raised around 100 questions for Reliance Industries and Walt Disney concerning their $8.5 billion merger of media assets in India, with specific focus on sports rights, according to reports. This extensive inquiry comes as no surprise to antitrust experts who had anticipated rigorous scrutiny following the merger’s announcement in February.
Implications of the Merger
The merger is poised to create India’s largest entertainment entity, encompassing 120 TV channels and two streaming services, along with holding valuable cricket broadcasting rights, a sport deeply cherished in India.
Defense by Reliance and Disney
In a confidential submission to the CCI in May, both Reliance and Disney argued that the merger would not hinder competition. They highlighted that the cricket broadcasting rights, which are a significant part of the merger, will expire in 2027 and 2028, allowing other entities to bid. They also noted that advertisers could reach cricket audiences through various platforms, including YouTube.
CCI’s Concerns and Additional Questions
The CCI has posed two sets of questions to further understand why YouTube, with its predominantly free user-generated content, should be considered in the same market as subscription-based streaming services like Netflix and Disney+. In response, Reliance and Disney emphasized YouTube’s vast reach and its mix of licensed, paid content.
Market Data and Impact
According to Media Partners Asia, YouTube accounted for 88% of India’s online video market last year, with premium streaming services like Netflix and Disney+ making up the remaining 12%. The merger would also grant Reliance-Disney control over significant digital and TV rights for major cricket tournaments and Wimbledon, raising further antitrust concerns.
Industry Impact
The substantial information requests by the CCI reflect the massive scale of the deal. The merger is set to reshape India’s $28 billion entertainment market, which includes other major players like Zee Entertainment and Sony. Jefferies estimates that the merged entity will command 40% of the TV and streaming advertising market share.
Conclusion
The outcome of this extensive scrutiny by the CCI will significantly influence the future landscape of India’s entertainment industry, potentially setting new precedents for media mergers and acquisitions in the region.
