Key Concerns Raised by the Competition Commission of India (CCI) During the Reliance-Disney Merger Deal
I. Introduction
Mergers and acquisitions (M&A) have become a cornerstone of corporate strategy, enabling companies to consolidate resources, enhance market competitiveness, and unlock operational synergies. Among the most notable recent transactions is the $8.5 billion merger between Reliance Industries media assets and Walt Disney Indian operations. While this deal promises to reshape India’s media landscape, it has also raised significant concerns from the Competition Commission of India (CCI), particularly regarding its potential impact on competition and market dynamics.
II. Reliance-Disney Merger: A Brief Overview
The merger finalized in late 2024 resulted in the integration of Reliance Viacom18 Media with Disney Star India. The joint venture created a media powerhouse with a vast portfolio of over 100 television channels and two major streaming platforms. Reliance holds a 16.34% stake, Viacom18 controls 46.82%, and Disney retains a 36.84% share in the merged entity. This strategic consolidation aims to capitalize on India’s growing appetite for diverse content, reaching an audience of approximately 750 million viewers across traditional and digital platforms.
This merger represents a calculated effort to achieve operational synergies and strengthen competitive positioning against global streaming giants like Netflix and Amazon Prime Video. However, the transaction has not been without regulatory scrutiny.
The CCI sought antitrust clearance from Reliance Industries Limited (RIL) and Disney Star India to assess whether the proposed merger would reduce competition or create an unfair monopoly in the market.
III. Key Concerns Raised by CCI
a. Market Dominance in Sports Broadcasting
One of the CCI’s primary concerns is the merged entity's overwhelming market share in sports broadcasting, particularly cricket, a sport that dominates India’s entertainment ecosystem. Before the merger, Disney already held nearly 77.7% of the sports TV market through its Star Sports channels, while Reliance controlled an additional 7.5%. Post-merger, this figure surged to a staggering 85.2%, leaving competitors, for instance, Sony with only a marginal presence.
The CCI highlighted that such dominance could:
• Limit competition by creating barriers for smaller players.
• Increase advertising costs due to reduced bargaining power for advertisers.
• Restrict consumer choice, as fewer players would control premium cricket content.
b. Advertising Market Concentration
The merged entity is poised to control roughly 40% of India’s advertising revenue across television and digital platforms. This level of concentration raises concerns about:
• Pricing power: The ability to dictate higher advertisement rates during cricket events– Indian Premier League (IPL) or International Cricket Council (ICC) tournaments.
• Reduced options for advertisers, especially small businesses that may struggle with inflated costs.
• Imbalanced negotiations, as advertisers would have limited alternatives for reaching large audiences.
c. Barriers to Entry
The merged entity could discourage new entrants or smaller competitors from bidding for future sports broadcasting rights or other premium content. While Reliance and Disney argued that international players might enter the foray, no concrete evidence supports this claim, leaving doubts about whether competition will truly increase in the future.
d. Delay in Selling Cricket Rights
The delay in selling cricket broadcasting rights was a significant concern for CCI. This delay prolongs market concentration, allowing the merged entity to retain dominance over cricket broadcasting for several years. The need for cricket board approval complicates any potential sale, further delaying corrective measures. This undermines regulatory remedies aimed at reducing monopolistic practices. Overall, it limits the effectiveness of interventions designed to promote competition in the market.
IV. Proposed Remedies by Reliance and Disney
To address these concerns, Reliance and Disney offered several concessions:
Channel Divestments: The companies agreed to sell seven TV channels, including Hungama and Super Hungama, to reduce their market share.
Advertisement Slot Commitments: They pledged not to bundle advertising slots for key cricket rights during ongoing contracts.
Expiration of Cricket Rights: The companies emphasized that most cricket broadcasting rights would expire by 2027-28, potentially opening up opportunities for other players.
Despite these measures, experts remain sceptical about their effectiveness in mitigating long-term anti-competitive risks.
V. Strategic Implications
From a broader perspective, this merger underscores the growing trend of consolidation in India’s media sector as companies aim to leverage synergies and scale to compete globally. However, it also highlights the challenges regulators face in balancing industry growth with fair competition. The deal positions Reliance-Disney as a formidable player capable of reshaping consumer behaviour through integrated content offerings across TV and digital platforms.
VI. Conclusion
While the Reliance-Disney merger holds immense potential for transforming India's media landscape, it raises critical questions about market concentration and competition. The CCI's scrutiny serves as a reminder of the need for regulatory vigilance in safeguarding consumer interests and ensuring a level playing field for all market participants. The need for a level playing field is crucial, as excessive market concentration can lead to higher costs for consumers, reduced innovation and limited choices. By navigating these challenges, India can foster an inclusive media sector, benefitting both the consumer and businesses.
