Reliance-Disney offer concessions for $8.5 billion India merger deal, but cricket broadcast rights remain a hurdle

Reliance Industries and Disney have offered some concessions to secure the $8.5 billion media merger deal from the Competition Commission of India (CCI). The companies are unwilling to sell any cricket broadcast rights, which is the major aspect of the deal, reported Reuters, quoting two anonymous sources in the know of the development on Thursday, August 22.

The news agency reported on Tuesday that the competition regulator CCI sent a warning notice to both companies, expressing concerns that the merged entity could potentially harm competition due to its power over the cricket broadcast rights in the country, which can hurt advertisers.

The companies have offered to ease the advertising rate hikes and not increase them unreasonably, said the report, quoting sources in the know.

Reliance and Disney aim to make the biggest entertainment company after the $8.5 billion media merger, which will compete with Sony, Netflix, Amazon, 120 other TV channels and two streaming services in the country. According to the report, the rights to cricket broadcasting remain the main attraction of the deal.

Experts on antitrust law reasoned that the only way for this deal to omit the CCI hurdles was to sell some cricket broadcasting rights for some tournaments or broadcast mediums in TV. Reliance and Disney made a new private submission to the competition regulator in which the companies said that they are unwilling to do so, reported the agency quoting two sources in the know.

Reliance, Disney and the CCI did not promptly respond to the news agency's questions, as per the report.

The companies told CCI that they were willing to commit that they are not going to increase the prices for advertisements in the cricket matches in any unreasonable way, said the sources in the report. The companies are not committed to put any price caps or freeze on increasing ad rates for a particular period, said one of the sources quoted in the report.

The Competition Comission of India (CCI) is likely to review the submission and see if the new concessions are enough to address the competition concerns or if a bigger investigation is needed. The companies have spent $9.5 billion behind the cricket rights and is too lucrative to part ties with, said one of the sources quoted in the report.

According to the report, Jefferies says that the merged media giant will have 40 per cent of the share of the advertising market in TV and streaming segments in the country.