Disney, Reliance win approval for $8.5 billion merger in India

Bengaluru: Walt Disney Co and Reliance Industries won approval on Wednesday for an $8.5 billion merger of their Indian media assets after assuaging regulatory worries about their grip on broadcasting rights for cricket, India's favourite sport.

The Competition Commission of India (CCI) said the deal had been approved subject to modifications submitted voluntarily by the companies without sharing further details. A detailed order will be issued in the coming days, clearing what was seen as the biggest hurdle for the deal.

To get the merger over the line, the two companies have offered concessions, including a commitment not to raise advertising rates unreasonably for streamed cricket matches and to sell 7-8 non-sports TV channels, a source familiar with the matter said.

The merger will create India's biggest entertainment player, with 120 TV channels and two streaming services, to compete with Sony, Netflix, and Amazon.

It will also give Reliance owner Mukesh Ambani, Asia's richest person, a stronger hold on the $28 billion media and entertainment sector. The regulatory nod comes a day before Ambani is set to address Reliance shareholders at its Annual General Meeting.

After asking Reliance and Disney around 100 questions related to the merger, the CCI raised concerns the new entity would control most cricket rights for TV and streaming in India, and could hurt advertisers.

Cricket has a fanatical following in India, the world's most populous country with an estimated 1.4 billion people. In recent years, Reliance and Disney have spent roughly $9.5 billion on TV and streaming rights for the world's richest cricket tournament, the Indian Premier League, the International Cricket Council's matches, such as the one-day and T20 World Cups, and matches organised by the Indian cricket board.

The source added that the companies also pledged not to bundle and sell advertising slots for different cricket tournaments and kept subscription rates for their offerings under regulatory limits.

Neither Reliance nor Disney immediately responded to requests for comment. Over the years, both companies have offered free viewing of cricket matches to attract users to their streaming platforms, hoping they will then buy subscriptions.

Karan Taurani, an analyst at India's Elara Capital, said the deal should close within six months as it still needs approval from an Indian companies tribunal, which is expected to be granted.

Disney and Reliance's merged entity will also own Indian broadcast rights for the Wimbledon tennis championship, MotoGP and the English Premier League, among other sporting events.

Jefferies has said the Disney-Reliance entity will have a 40% share of the Indian advertising market in the TV and streaming segments. Companies spent nearly $2 billion in India in 2023 on sports-related sponsorship, endorsement and media, media agency GroupM estimates, with cricket accounting for 87% of the spend.

Reliance will be the majority owner of the merged company, which will be chaired by Ambani's wife Nita Ambani, who has experience in the arts and ties with Bollywood.

KK Sharma, a former head of mergers at the CCI, has said the deal, if approved, would create "a big fish in the broadcasting market" that would practically have a "monopoly on cricket advertisement revenues."