Disney-Reliance Cricket Rights Under Fire as Merger Faces Antitrust Hurdles

The $8.5 billion merger between the Indian media assets of Walt Disney and Reliance faces potential disruption as India’s antitrust regulator raises concerns over its impact on the competitive landscape of cricket broadcasting. According to Reuters, the Competition Commission of India (CCI) has issued a warning to the companies, indicating that the merger could create a near-monopoly in the lucrative cricket broadcast market, potentially allowing the merged entity to exert excessive control over advertising rates.

The Disney-Reliance partnership aims to create India’s largest entertainment conglomerate, with an extensive portfolio of 120 television channels and two streaming platforms, positioning it as a formidable competitor against global giants like Sony, Netflix, and Amazon. Central to this strategy is securing cricket broadcast rights, a highly coveted asset in India where the sport enjoys unparalleled popularity.

However, the CCI’s intervention may force the companies to consider significant changes to their merger plans. Reuters reports that seven antitrust lawyers have suggested the companies might need to propose structural alterations to their deal, which could include selling some of their cricket broadcast rights or agreeing to behavioral remedies, such as capping advertising rates for a specified period. These remedies aim to mitigate concerns about the merged entity’s potential dominance in the cricket broadcasting sector.

Over the years, Disney and Reliance have invested approximately $9.5 billion in acquiring television and streaming rights for premier cricket events, including the Indian Premier League, ICC tournaments and matches organized by the Indian cricket board. These rights are integral to attracting viewers to their platforms, often through free broadcasts designed to convert viewers into paying subscribers.

Should the companies fail to address the CCI’s concerns, they may face prolonged scrutiny, potentially delaying the merger’s approval by several months. Some experts believe that if cricket rights were significantly impacted, the merger could be jeopardized. One lawyer commented that without these rights, “the deal is dead,” underscoring the critical importance of cricket to the proposed merger.

Related: India’s Antitrust Body Raises Concerns Over $8.5 Billion Reliance-Disney Merger

In an attempt to alleviate regulatory concerns, Reliance has already offered to divest a few regional-language television channels. However, Reuters reports that this gesture has not satisfied the CCI, particularly as the companies have resisted any compromise on their cricket rights. Legal experts like Kanika Chaudhary Nayar, a partner at DSK Legal, have suggested that the companies might also consider selling non-cricket sports channels to retain their core cricket broadcasting portfolio.

The stakes are high, with the combined entity also holding Indian broadcast rights for other major sports events, including Wimbledon, MotoGP, and the English Premier League. The sports media market in India is substantial, with nearly $2 billion spent on sports-related sponsorship, endorsements and media in 2023, of which cricket accounts for a dominant 87%, according to media agency GroupM.

Despite the CCI’s warning, insiders remain optimistic that the merger could proceed without requiring the sale of cricket rights. The potential for the deal to establish a “practical monopoly on cricket advertisement revenues,” as former CCI mergers head K.K. Sharma has warned, remains a significant concern for regulators.

Source: Reuters