Walt Disney Co (DIS) and Reliance Industries (RELI) achieved a major milestone on Wednesday by securing approval for their $8.5 billion merger, which integrates their Indian media assets into a dominant force in the country’s entertainment landscape. The Competition Commission of India (CCI) granted conditional approval after addressing concerns regarding the companies’ overwhelming control of cricket broadcasting rights, a sport beloved by millions across India.
Regulatory Approval and Concessions
The CCI’s approval came after Disney and Reliance made significant concessions to assuage worries over their combined dominance in cricket broadcasting. These concessions included commitments not to raise advertising rates unreasonably for streamed cricket matches and plans to divest 7-8 non-sports TV channels. These steps were critical in gaining the commission’s approval, although further details are expected in an upcoming detailed order.
Cricket Rights and Market Dominance
The merger will result in the creation of India’s largest entertainment player, boasting a portfolio of 120 TV channels and two streaming services. This new entity is poised to compete with global giants like Sony (SONY), Netflix (NFLX), and Amazon (AMZN) in India’s $28 billion media and entertainment sector. The combined company will hold valuable cricket broadcasting rights, including those for the Indian Premier League, the ICC World Cups, and other marquee events organized by India’s cricket board. Reliance and Disney have invested nearly $9.5 billion in securing these rights over the past several years.
In response to concerns from the CCI, the companies also pledged not to bundle and sell advertising slots across different cricket tournaments and to keep subscription rates in line with regulatory limits. Their goal is to avoid any unreasonable price hikes, a key concern raised by advertisers.
Impact on India’s Media Landscape
This merger is set to reshape India’s media and entertainment industry, with Reliance’s Mukesh Ambani, Asia’s richest person, gaining greater influence over this rapidly growing sector. The deal is expected to close within six months, pending approval from an Indian companies tribunal. Once finalized, the Disney-Reliance entity will command an estimated 40% share of India’s TV and streaming advertising market, according to Jefferies, making it a formidable competitor to traditional and digital media platforms alike.
Additionally, the new company will not only dominate cricket broadcasting but will also control Indian broadcasting rights for major international sporting events such as Wimbledon, MotoGP, and the English Premier League. Nita Ambani, wife of Mukesh Ambani and a prominent figure with strong ties to Bollywood, will chair the merged entity.
A Major Shift in Indian Advertising
Cricket has an unparalleled following in India, accounting for 87% of the nearly $2 billion spent on sports-related sponsorships and endorsements in the country last year. With such a massive share of the advertising market at stake, the merger’s impact will be profound. However, K.K. Sharma, a former CCI official, warned that the merger could create what he described as “a monopoly on cricket advertisement revenues,” a concern that will likely shape future regulatory scrutiny.
This consolidation marks a significant moment in the evolution of India’s media industry, as global and local players alike adapt to a rapidly shifting landscape driven by the fervor for cricket and the growth of digital consumption.