Lawyers flag concerns over cricket broadcast rights in Reliance-Disney deal

Combined entity would have ‘absolute control’ over viewership of sport

Pat Cummins lifts the Cricket World Cup with teammates after winning the ICC Men’s Cricket World Cup India 2023 Final at Narendra Modi Stadium on November 19, 2023 in Ahmedabad, India. (Photo by Gareth Copley/Getty Images)

Eastern Eye

A PROPOSED merger of Walt Disney’s and Reliance’s media assets in India could spark intense anti-trust scrutiny over their market power, with lawyers flagging concerns that the combined entity’s strong portfolio of cricket broadcast rights could impact advertisers.

The Disney-Reliance $8.5 billion (£6.7bn) merger would create India’s No 1 TV player with 120 channels, with local rival Zee closest with 50. Analysts at India’s Ambit Capital estimate that the entity, which is set to be majority owned by billionaire Mukesh Ambani’s Reliance Industries, will have a 35 per cent share of the country’s TV viewership.

While the overall TV space will be closely assessed by the Competition Commission of India (CCI), six antitrust lawyers said cricket rights are going to be in spotlight as the regulators examine market share and the power of the combined entity.

Cricket has a fanatical following in India, where many fans worship players as gods. Companies shell out billions of dollars to win broadcast rights or spend on advertisements to lure consumers to their services.

Disney holds TV broadcast rights for the world’s most valuable cricket tournament, the Indian Premier League (IPL), as well as both India TV and streaming rights for International Cricket Council’s (ICC) matches. Reliance has streaming rights for the IPL, and the Indian cricket board’s rights for all matches.

KK Sharma, a former head of mergers at CCI, said the combined Disney-Reliance combo will raise eyebrows among regulators given the market power they will exert, especially in the cricket segment, requiring “deeper scrutiny.”

“If I was the regulator, I would begin with suspicion,” said Sharma, now a senior partner at Indian law firm Singhania & Co. “With Disney and Reliance together, hardly anything of cricket will be left. The regulator gets concerned even when there is a possibility of dominance. Here, it is not merely dominance but almost absolute control over cricket.”

Disney declined comment while Reliance did not respond to Reuters queries. The CCI also did not respond.

Media agency GroupM estimates sports industry spending in India totalled $1.7bn (£1.3bn) in 2022, up 49 per cent from the previous year. Cricket accounted for 85 per cent of the spending on sponsorship, endorsement and media.

The companies will approach the CCI for approvals in coming weeks. Disney and Reliance have said they hope to complete the transaction by end of this year or early 2025.

A senior Disney source did not comment on the scrutiny the merger may face, but said the company consulted a number of antitrust attorneys and is confident the deal will get final clearance.

Five other lawyers echoed similar concerns as Sharma, saying the Disney-Reliance entity’s strong grip on the cricket ecosystem could mean advertisers have less bargaining power.

Vaibhav Choukse, head of competition law at India’s J Sagar Associates, said the firms can explore socalled “behavioural commitments” such as not adjusting advertising rates for a period of time to assuage concerns of regulators, who could, in extreme cases, order the entity to divest certain channels or cricket rights.

In a note, Jefferies said the DisneyReliance entity “will sport the most lucrative cricketing rights in India, and has 40 per cent share of the advertising market in TV and streaming segments, allowing it “better ad inventory monetization”.

“The regulator’s concern as far as cricket is concerned will be on the advantage the Disney-Reliance entity will have on raising prices for advertisers,” said Karan Chandhiok, head of competition law at India’s Chandhiok & Mahajan.

Disney and Reliance – before the merger – have competed intensely on cricket. Reliance recently offered free live streaming of IPL matches for which it had paid $2.9bn (£2.3bn) in rights. Later, Disney offered free live streaming of cricket World Cup on mobile devices.

The anti-trust authorities will also closely look at the TV dominance.

But some lawyers have said that the assessment on the TV side could become easier as another media merger between the India’s Zee Entertainment and Japan’s Sony collapsed this year, leaving more competitors in the market.

Still, lawyers said, Disney-Reliance could face heat on some key TV channel offerings where they together have an outsized market share that is above 40-50 per cent.