India’s antitrust body has reached an initial assessment that the $8.5 billion India merger of Reliance and Walt Disney media assets harms competition due to their power over cricket broadcast rights, four sources told Reuters on Tuesday.
It is the biggest setback so far to the planned Disney-Reliance merger which aims to create India’s biggest entertainment player which will compete with Sony (6758.T), opens new tab, Zee Entertainment (ZEE.NS), opens new tab, Netflix (NFLX.O), opens new tab and Amazon (AMZN.O), opens new tab with a combined 120 TV channels and two streaming services.
The Competition Commission of India (CCI) has privately warned Disney (DIS.N), opens new tab and Reliance (RELI.NS), opens new tab through a notice in which it has shared its concerns about their grip over rights to broadcast the favourite 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 (RELI.NS), opens new tab, 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.
Reliance, Disney and the CCI did not respond to requests for comment. All sources declined to be named as the CCI process is confidential.
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, sources told Reuters.
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.