For India Merger, Disney-Reliance May Have To Dilute Cricket Stakes

Photo: Reuters/Ash Allen

NEW DELHI, (REUTERS) – 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.

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.

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 behavioral remedies, or both, which can include selling some of their broadcast rights.

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 organized 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.

The worst case is if the CCI asks for sale of some of their rights.

Cricket rights are central to the Disney-Reliance merger.

Over the years, both companies offered free viewing of matches to attract users to some of their streaming platforms in the hope they will buy subscriptions to watch more content.

One lawyer said if there were no cricket rights, “the deal is dead”.

Together, the merged Disney-Reliance entity will also own Indian broadcast rights for other sporting events including the Wimbledon tennis championship, MotoGP and the English Premier League.

Media agency GroupM estimates that companies spent nearly $2 billion in India in 2023 on sports industry related sponsorship, endorsement and media.