Potential Disney-Reliance merger may face antitrust scrutiny in India

The proposed merger between Walt Disney's India unit and Mukesh Ambani's media business has sent ripples through India's entertainment landscape, poised to create a colossal entity. However, legal experts warn that such a move would invite intense antitrust scrutiny, likely necessitating divestment of assets to gain regulatory approval, Reuters reported.

Disney and India's Reliance, both wielding significant streaming services and boasting a collective tally of 120 TV channels, are eyeing a merger where Ambani's conglomerate is expected to secure a majority stake, sources revealed this week.

For Disney, grappling with losses in its Hotstar streaming app, this merger presents an opportunity. CEO Bob Iger acknowledged the struggle in certain business segments, expressing a keenness to fortify the financial aspect.

If this deal materialises, it would mark the second seismic transformation in India's TV and streaming industry. Sony's plans to merge with Zee Entertainment have navigated scrutiny by the Competition Commission of India (CCI) and are on track to conclude soon, with commitments to divest certain TV channels.

Amidst competition from Netflix and Amazon, the emergence of two entertainment behemoths could potentially wield substantial anti-competitive clout over advertisers, users, and content creators, caution antitrust specialists.

Legal experts anticipate rigorous scrutiny of the Disney-Reliance merger, particularly in their streaming businesses and dominance in cricket broadcasting rights, a fervently followed sport in India.

The combined might of Disney Hotstar, holding rights for International Cricket Council matches until 2027, and Reliance's JioCinema app, securing rights for the popular cricket league IPL, raises concerns about potential monopolistic control over advertising rates.

In TV, Viacom18's 38 channels featuring brands like Comedy Central and Nickelodeon, coupled with Disney's renowned Star brand boasting 80 channels, could raise regulatory eyebrows.

According to Reuters, analysts estimate that a merged Disney-Viacom18 entity could command a significant share of the TV ad market, potentially hindering competition. Market data presented during the Zee-Sony merger approval underscores this consolidated market power.

Legal experts emphasise the need for scrutiny if the market share of the merged entities exceeds 40-50% in any segment, indicating a probable in-depth investigation by the CCI.

To assuage regulatory concerns, options such as divesting channels or commitments to control ad rates for a stipulated period might be considered, according to industry experts.

As discussions continue behind closed doors, the fate of this potential merger rests on navigating the stringent antitrust landscape in India while aiming to foster a powerful entertainment conglomerate.

Also Read Reliance and Disney in advanced talks for mega merger in Indian media: Report