To seal India merger, Walt Disney and Reliance may need to dilute cricket dominance

The Indian antitrust body’s opposition to a proposed $8.5 billion merger of the Indian media assets of Walt Disney and Reliance may force the companies to sell some lucrative cricket broadcast rights or commit to advertising price caps.

Reuters reported earlier this week that the Competition Commission of India (CCI) has sent a warning notice to the companies expressing concern that the merged entity will effectively have a monopoly on cricket broadcast rights worth billions of dollars, allowing it to squeeze advertisers.

Neither the companies nor the regulator have commented as the process is confidential.

Reliance-Disney are aiming to create India’s biggest entertainment player which will compete with Sony, Netflix and Amazon with 120 TV channels and two streaming services, but cricket, which has a fanatical following in the country, is the crown jewel.

According to seven antitrust lawyers, to keep the deal alive the companies will now have to come up with structural changes to their arrangement or so-called behavioural remedies, or both, which can include selling some of their broadcast rights. The term refers to changes in how a merged entity would conduct its business.

The companies can simply sell rights of certain cricket tournaments or for a particular medium, such as TV or streaming, to meet antitrust concerns, they said.

Reliance and Disney have spent roughly $9.5 billion in recent years for TV and streaming rights for the world’s richest cricket tournament, the Indian Premier League, the International Cricket Council’s matches such as the one-day and T20 World Cups, and matches organised by the Indian cricket board.

Another solution the companies can offer is to commit that they will cap advertisement rates for cricket matches for a few years, so they can assure the watchdog that advertisers’ interests can be protected, said the lawyers.

“What they can offer is that the rates will be fair, reasonable and non-discriminatory, or that they will not increase the rate beyond a certain percentage which accounts only for inflation,” said Rahul Rai, a partner at Indian law firm Axiom5.
“The worst case is if the CCI asks for sale of some of their rights.”

Disney, Reliance and the CCI did not respond to Reuters requests for comment. The companies have previously told the regulator the rights will not harm advertisers and will expire by 2027-28, when rivals can bid for them again.