Reliance and Disney Seek to Smooth Over Antitrust Hurdles for $8.5 Billion India Merger

In a move to expedite the regulatory approval process for their $8.5 billion merger, Reliance and Walt Disney have proposed selling a select number of TV channels. However, the companies are resisting adjustments to their cricket broadcast rights, according to sources familiar with the matter, as reported by Reuters.

Antitrust experts have expressed concerns that the merger, which was announced in February, could face rigorous scrutiny. The deal, set to create India’s largest entertainment conglomerate, would significantly increase competition with major players such as Sony, Zee Entertainment, Netflix and Amazon. The merged entity, primarily owned by Reliance’s Mukesh Ambani, will boast a portfolio of 120 TV channels and two streaming services, alongside highly valuable cricket broadcast rights worth billions of dollars. This raises concerns about the potential for increased pricing power and a dominant grip over advertisers.

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According to Reuters, after the Competition Commission of India (CCI) raised nearly 100 questions regarding the merger, Reliance and Disney have proposed selling fewer than ten TV channels. This concession aims to address concerns about market dominance and secure a quicker approval from the regulatory body. The proposed sales are expected to focus on regional Indian language channels, where both companies currently hold a significant market share.

In a similar context, Zee and Sony had previously sought to form a $10 billion TV powerhouse in India. In 2022, they offered to divest three TV channels to obtain CCI approval, although the merger ultimately fell through. Historical data from CCI’s notification indicated that Disney and Reliance’s channels had a dominant market share in local languages, with combined shares of 65% to 75% in Marathi and up to 50% in Bengali language entertainment channels.

The proposed sale of channels is a critical step for Reliance and Disney as they navigate the complexities of antitrust regulations to finalize their merger and consolidate their position in India’s competitive media landscape.

Source: Reuters