With Cricket Viewing At Stake, Disney-Reliance Merger Faces Scrutiny

Photo: Reuters/Francis Mascarenhas

MUMBAI, (REUTERS) – In the biggest setback so far to Disney and Reliance’s plans to strike a $8.5 billion India media assets merger, the country’s antitrust body has reached an initial assessment that the deal harms competition due to their power over cricket rights.

The merger aims to create India’s biggest entertainment player which will compete with Sony, Zee Entertainment, Netflix and Amazon with a combined 120 TV channels and two streaming services.

The Competition Commission of India has privately warned the two companies through a notice in which it has shared its concerns about their grip over rights to broadcast the favorite sport of the world’s most populous country, one of the sources said.

The CCI has asked the companies to explain within 30 days why an investigation should not be ordered.

“Cricket is the biggest pain point for the CCI,” said another source.

The merged company, which would be majority owned by Asia’s richest man Mukesh Ambani’s Reliance would have lucrative rights worth billions of dollars for the broadcast of cricket on TV and streaming platforms, raising fears over pricing power and its grip over advertisers.

Antitrust experts had warned the merger, announced in February, could face intense scrutiny, especially on the sporting rights issue.

The CCI earlier privately asked Reliance and Disney around 100 questions related to the merger. The companies have told the watchdog they are willing to sell fewer than 10 television channels to assuage concerns about market power and win an early approval.

But they had refused to relent on cricket, telling the CCI that broadcast and streaming rights will expire in 2027 and 2028 and cannot be sold right now, and that any such move would require the cricket board’s approval, which could delay the process.

The Board of Control for Cricket in India has Jay Shah, the son of Prime Minister Narendra Modi’s home minister Amit Shah, in one of its top positions as secretary.

The former head of mergers at the CCI, K.K. Sharma, has said the merger could lead to “almost absolute control over cricket.”

Zee and Sony planned to create a $10 billion TV behemoth in India and in 2022 and got a similar warning notice. They offered some concessions by selling three TV channels which helped them win CCI approval, but the merger eventually collapsed.