Reuters: India antitrust body warns Disney, Reliance media merger will hurt rivals

The merged entity is poised to control cricket broadcast rights worth billions of dollars, sparking concerns about its pricing power and influence over advertisers.

India's antitrust authority has preliminarily concluded that the $8.5 billion merger between Reliance and Walt Disney's media assets poses a threat to competition, particularly due to their dominance in cricket broadcasting rights, according to four sources who spoke to Reuters.

The Competition Commission of India (CCI) has privately informed both Disney and Reliance of its concerns and requested that the companies justify why a formal investigation should not be initiated, one of the sources revealed.

"Cricket is the biggest concern for the CCI," one of the sources stated.

The merged entity, which would be majority-owned by Mukesh Ambani's Reliance, is poised to control cricket broadcast rights worth billions of dollars, sparking concerns about its pricing power and influence over advertisers.

Antitrust experts had previously cautioned that the merger, announced in February, would likely undergo intense scrutiny, as it would create India's largest entertainment entity, competing with Sony, Zee Entertainment, Netflix, and Amazon, with a combined portfolio of 120 TV channels and two streaming services.

The CCI had earlier privately posed around 100 questions to Reliance and Disney regarding the merger. According to sources, the companies informed the regulator that they are prepared to divest fewer than 10 television channels to alleviate concerns about market power and secure early approval. However, a second source mentioned that the companies could still address the CCI's concerns by offering more concessions, noting that the notice for now "is a precursor of things getting complicated."

"The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough," the person added. A third source indicated that the CCI has given the companies 30 days to respond and clarify their position.