Reliance and Walt Disney merger could threaten competition: CCI

CCI on mega-merger: The national antitrust body has reached a preliminary conclusion that the $8.5 billion merger between Reliance and Walt Disney’s media assets could harm competition due to their significant control over cricket broadcast rights, according to four sources who spoke to Reuters on Tuesday.

In what could be the most significant setback to the proposed merger, the Competition Commission of India (CCI) has privately informed Disney and Reliance of its concerns, asking the companies to justify why a full investigation should not be initiated, one of the sources revealed.

Neither Reliance, Disney, nor the CCI responded immediately to requests for comment. All sources requested anonymity, as the CCI's proceedings are confidential.

"Cricket is the biggest pain point for the CCI," one source stated.

The merged entity, which would be predominantly owned by Mukesh Ambani’s Reliance, is set to acquire valuable cricket broadcast rights worth billions of dollars, raising concerns over potential pricing power and dominance in the advertising market.

Antitrust experts had previously warned that the merger, announced in February, would likely face rigorous scrutiny, as it would create India’s largest entertainment company. The combined entity would compete with Sony, Zee Entertainment, Netflix, and Amazon, boasting 120 TV channels and two streaming services.

Earlier, the CCI had privately asked Reliance and Disney around 100 questions related to the merger. Sources indicated that the companies have expressed willingness to divest fewer than 10 television channels in an effort to alleviate concerns about market dominance and secure early approval.

However, the companies may need to offer further concessions to address the CCI’s concerns, according to a second source, who noted that the notice is “a precursor of things getting complicated.”

"The notice indicates that the CCI initially believes the merger could harm competition and that the concessions offered so far are insufficient," the source added.

A third source mentioned that the CCI has given the companies 30 days to respond and present their case.

(With Reuters inputs)