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The $8.5 billion merger between Disney and Reliance is currently under intense scrutiny.

Concerns over market dominance in cricket broadcasting have led to intense scrutiny of the Disney-Reliance merger by the Competition Commission of India (CCI).

NEW DELHI:

India’s Competition Commission (CCI) has voiced significant concerns about the $8.5 billion merger between Reliance and Walt Disney’s media assets, primarily focusing on the potential impact on competition in cricket broadcasting rights. This merger is poised to create India’s largest entertainment conglomerate, which could reshape the competitive landscape of the media industry, drawing scrutiny from major competitors like Sony, Zee Entertainment, Netflix, and Amazon.

According to sources familiar with the matter, the CCI has issued a private notice to both Reliance and Disney, outlining its concerns over the merger’s potential dominance in the cricket broadcasting sector, a crucial area of media rights in India. The notice demands a detailed explanation from the companies within 30 days to justify why a comprehensive investigation should not be initiated. This step reflects the CCI’s apprehension that the merged entity could gain disproportionate influence over pricing and advertising in the cricket broadcasting market.

The proposed merger, which would see Reliance emerge as the majority owner, includes highly sought-after rights to broadcast cricket on television and streaming platforms. These broadcasting rights are valued in billions, and the merger could grant the new entity considerable control over this lucrative market segment. The fear is that such control might stifle competition and create an imbalance in market dynamics, affecting both pricing strategies and advertising revenues.

Disney

As part of its investigation, the CCI has requested detailed responses from Reliance and Disney on a range of issues related to the merger. Despite the intense scrutiny, neither Reliance, Disney, nor the CCI have officially commented on the matter, with sources remaining anonymous due to the confidential nature of the proceedings.

Industry experts had anticipated that the merger would attract significant regulatory attention, especially concerning sports broadcasting rights. In response to earlier inquiries from the CCI, Reliance and Disney submitted answers to approximately 100 questions regarding the merger. To mitigate concerns about market dominance, the companies have proposed divesting fewer than 10 television channels. This move is intended to demonstrate their willingness to comply with regulatory requirements and secure early approval for the merger.

However, the companies have been reluctant to negotiate on cricket broadcasting rights. They argue that these rights, which are set to expire in 2027 and 2028, cannot be transferred or sold without the explicit approval of the Board of Control for Cricket in India (BCCI). The BCCI, a significant body in Indian cricket, is led by Jay Shah, who is the son of India’s Home Minister Amit Shah. This connection adds another layer of complexity to the regulatory review, as it intertwines political and sports governance elements.

The CCI’s concerns about the merger could potentially delay the approval process, but the companies have the opportunity to address these issues by proposing additional concessions. If the concerns are not adequately addressed, the CCI may initiate a full investigation, which could further complicate and prolong the merger approval process.

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