Reliance-Disney $8.5 billion merger faces scrutiny, CCI sends 100 antitrust queries

The Competition Commission of India (CCI) has sent nearly 100 queries to Reliance Industries and Walt Disney regarding their $8.5 billion merger of Indian media assets, Reuters reported on Monday quoting two anonymous sources.

The CII inquiry questions also include queries related to the details of sports rights, which increases the scrutiny of the deal, as per the report. The Reliance Disney merger announced in February 2024 is likely to face intense scrutiny as it will give rise to the biggest entertainment company with 120 television channels and two online streaming services, according to antitrust experts quoted by Reuters. The two media giants will have co-ownership of the rights to the cricket segment.

Reliance Industries and Walt Disney submitted a confidential submission to the antitrust regulator stating that the merger would not hurt the competition and put forward an argument that the cricket rights would expire in 2027 and 2028. This allows the competitors to bid for the same, according to a Reuters report in May 2024.

The report also stated that the competition regulator has asked for more details about the deal through two sets of questions, including why YouTube, which deals in the majority of free and user-generated content, should be treated the same way as a paid service provider like Netflix and Disney, the sources quoted above told Reuters.

The sources said that both companies have responded to the CCI queries and argued that YouTube runs paid content, has a wide reach, and has its license.

Media Partners Asia data showed that in 2023, YouTube was responsible for 88 per cent of the market share of the online video market in India. The premium video market, at 12 per cent, was dominated by other streaming services that make premium content for the long-form format, as per the report.

According to the report, the digital and television cricket rights valued at billions of dollars for the top cricket tournaments and the tennis Wimbledon championship have raised more competition scrutiny.

"The CCI is so far not raising concerns on the rights but is gathering information," reported Reuters, quoting one of the sources quoted above. However, according to the report, the regulator has asked questions about the entity's ownership of the sports rights.

Sources also said that the request for information through the questions is likely to be because of the size of the deal. Reliance and the Competition Commission of India (CCI) did not give an official response to Reuters.

The Reliance Disney merger will change the $28 billion entertainment market of India, once it gets the green flag from the competition regulator who is still reviewing the merger. Analyst firm Jefferies estimates the merger to control 40 per cent of the market share in the television and streaming segments in India, as per the report.