2024-08-22 08:09:33
New Delhi: The Competition Commission of India (CCI) has expressed concern over the $8.5 billion media merger between Reliance and Disney. CCI believes that this merger may harm competition. It has expressed the danger of Reliance becoming a monopoly due to the deal. CCI has informed Reliance and Disney about this. It has also warned of investigation. This news is a big blow to the Reliance-Disney merger announced in February. Under this deal, Reliance would have got a majority stake in the combined company. CCI was reviewing this deal. It asked about 100 questions to both the companies.
CCI’s biggest concern is that the merged company may hike advertising rates, especially during live events. According to a financial analysis by Jefferies, this merger will give the combined company control over about 40% of the Indian advertising market on television and streaming platforms.
Fear of monopoly on broadcasting rights
There is also a fear of monopoly on cricket broadcasting rights due to this merger. Former CCI merger chief KK Sharma has expressed concern that this merger can lead to almost complete control over cricket as the combined company will dominate sports broadcasting. Reliance and Disney have 120 TV channels and two streaming platforms, which will compete with big companies like Sony, Zee Entertainment, Netflix and Amazon.
To address CCI’s concerns, Reliance and Disney have offered to sell less than 10 television channels. However, CCI has made it clear that cricket broadcasting and streaming rights cannot be sold until they expire in 2027 and 2028.
Reliance and Disney have to present their side in 30 days
The situation is reminiscent of the attempted merger of Zee and Sony in 2022, which faced similar objections from the CCI. However, those companies had made several concessions, including selling three TV channels. But, despite the CCI’s approval, they failed to complete the merger.
The CCI has given Reliance and Disney 30 days to clarify their stand. It remains to be seen whether the companies are willing to make further concessions to address CCI’s concerns or the deal will be cancelled.