Disney-Reliance offer concessions for India merger, but no cricket rights sale

Reliance Industrial Infrastructure

23/08/2024 24:30

(Repeats earlier story without change)
    By Aditya Kalra
       NEW DELHI, Aug 22 (Reuters) - Disney  DIS.N  and
Reliance  RELI.NS  have offered some concessions to secure an
India antitrust approval for their $8.5 billion media merger,
but are unwilling to sell any cricket broadcast rights, the
biggest prize in the deal, two sources familiar with matter
said.
Reuters reported earlier this week that the Competition
Commission of India (CCI) sent a warning notice to the companies
expressing concern that their merged entity will have a tight
grip on most cricket rights for TV and streaming in India, and
can hurt advertisers.
    In their response, the companies have offered to go easy on
advertising rate hikes and not increase them unreasonably, the
sources said.
Reliance-Disney are aiming to create India's biggest
entertainment player which will compete with Sony  6758.T ,
Netflix  NFLX.O  and Amazon  AMZN.O  with 120 TV channels and
two streaming services, but cricket, which has a fanatical
following in the country, is the crown jewel. 
    Many antitrust experts had said that one way to clear the
antitrust hurdle was to sell some cricket rights, be it for some
tournaments or broadcast medium like TV, but Disney and Reliance
have made a new private submission at the CCI in which they have
said they are unwilling to do so, said the two sources, who
declined to be named as the process is confidential.
    The submissions are being reported for the first time.
Reliance, Disney and the CCI did not immediately respond to
Reuters queries.
    The companies have told the CCI they were willing to commit
they are not going to increase advertisement prices for cricket
matches in any unreasonable way, said the sources.
    The first source, however, added the companies have not
committed to imposing any price caps or freeze on increasing ad
rates for a particular period.    
Antitrust experts foresee that to seal the deal the companies
need to provide structural changes to their arrangement or
so-called behavioural remedies, or both, which can include
selling some broadcast rights and capping ad rates.
    The companies believe cricket rights in the country crazy
for the sport, and on which they've spent roughly $9.5 billion,
are too lucrative to part with and are key to the deal, said the
first source.     
    The CCI is likely to review the submissions and see if the
new concessions are enough to assuage antitrust concerns, or a
broader investigation is needed.
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.
    Jefferies has said the Disney-Reliance entity will have a
40% share of the advertising market in TV and streaming
segments.
The CCI earlier privately asked Reliance and Disney around 100
questions related to the merger. The companies have already told
the watchdog they are willing to sell fewer than 10 television
channels to assuage concerns about market power and win an early
approval. 

(Reporting by Aditya Kalra; editing by David Evans)
((aditya.kalra@thomsonreuters.com; @adityakalra;))