New Delhi:
The Competition Commission of India (CCI) has warned that the Disney and Reliance Media merger will harm competitors. According to sources, the CCI has reached an initial assessment that the $8.5 billion merger of Reliance and Walt Disney Media in India will harm competitors due to their strength on cricket broadcasting rights. News agency Reuters has given this information in its report quoting four sources.
This will be the biggest setback for this merger. A source said that the Competition Commission of India has privately conveyed its views to Disney and Reliance and has asked the companies to explain why an investigation should not be ordered.
Antitrust experts had warned that the merger, announced in February, could face intense scrutiny as it would create India’s biggest entertainment player, with a combined 120 TV channels and two streaming services, competing with Sony, Zee Entertainment, Netflix and Amazon.
The CCI had earlier privately asked Reliance and Disney about 100 questions related to the merger. Sources told Reuters that the companies have told the watchdog that they are willing to sell less than 10 television channels to address concerns about market power and get quick approval.
A second source said the CCI notice could delay the approval process, but companies could still address concerns by offering more concessions.
“This is a sign that things are getting complicated. The notice means that at the outset, CCI feels the merger will harm competition and whatever concessions have been given are not enough,” the source said.
“CCI is concerned that the entity may raise rates for advertisers during live events,” the third person said.
Jefferies has said the Disney-Reliance unit will have a 40% share of the advertising market in the TV and streaming segments.
Cricket fans in India are huge and advertisers capitalise on this during matches. Reliance-Disney will own the digital and TV cricket rights for top leagues, including the Indian Premier League, the world’s biggest cricket tournament.
Zee and Sony, which plan to build a $10 billion TV giant in India by 2022, received similar warning notices.
He offered some concessions by selling three TV channels, which helped him get CCI approval, but the merger eventually failed.
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