The Competition Commission of India has approved a mega $8.5-billion merger deal involving Reliance Industries, Viacom18, and Disney’s media assets in India.
This will lead to the Reliance-Walt Disney combine’s emergence as India’s biggest entertainment player, competing with Netflix, Sony, and Amazon.
In February this year, Reliance Industries Ltd (RIL) and the US-based entertainment giant Walt Disney had announced the formation of a joint venture (JV) that would combine the businesses of Viacom18 and Star India.
“Commission approves the proposed combination involving Reliance Industries Limited, Viacom 18 Media Private Limited and Star Television Productions Limited, subject to the compliance of voluntary modifications,” said a CCI post on X on Wednesday.
To gain CCI approval, the parties are understood to have committed to the divestment of a few non-sport channels and undertaken certain commitments regarding the broadcast of cricket, such as not increasing advertisement rates or offering advertisers fair terms), sources said. Put simply, to clear the CCI hurdle, the parties have given a commitment of not raising advertising rates unreasonably for cricket matches streamed.
Once the transaction is completed, the JV entity will have 120 TV channels (before divesting a few channels), and two streaming platforms.
Concerns flagged
CCI had recently expressed concern that the merged Reliance-Disney media assets would harm competition in the media sector due to their power over cricket broadcasting rights. The companies were asked to explain why CCI should not order an investigation into the deal.
Following the show cause notice, Reliance-controlled Viacom18 and Disney had filed their responses last week to the notice issued by the CCI.
While submitting remedies, they had, however, last week expressed their unwillingness to sell any cricket broadcast rights, seen as the crown jewel of this mega merger.
Cricket in India has a fanatical following, and broadcasting rights hold a lot of commercial value for both cricket tournaments within and outside India.
Foreign brokerage Jefferies had said that the Reliance-Walt Disney entity would enjoy a 40 per cent share of the advertising market in TV and streaming segments.
Currently, Viacom18 holds the digital rights to broadcast the Indian Premier League (IPL) from 2023 to 2027. Disney holds the media rights for International Cricket Council (ICC) matches from 2023 to 2027.
The structure
The proposed combination envisages to combine the entertainment businesses of Viacom18, part of RIL group, and SIPL, wholly owned by The Walt Disney Company (TWDC). SIPL, currently a wholly owned entity of TWDC through its subsidiaries, shall become a joint venture (JV) which will be jointly held by RIL, Viacom18 and existing TWDC subsidiaries.
RIL, either directly or indirectly, is engaged in several businesses such as exploration and production of oil and gas; petroleum refining and marketing; manufacture and sale of petrochemicals; manufacture and sale of chemicals; organised retail; media and entertainment activities; and telecommunication and digital services in India and worldwide.
Viacom18 is engaged in television (TV) channels, an OTT platform, selling commercial advertisement space on TV, licencing of merchandise, and so forth . Viacom18 is also engaged in production and distribution of motion pictures.
SIPL is engaged in a range of media activities including TV broadcasting and the production of AV content and motion pictures, operation of an OTT platform, and selling commercial advertisement space on TV channels and OTT platforms. SIPL is, directly or indirectly, a wholly owned entity of TWDC.
SIPL is a company incorporated in the British Virgin Islands and owned, indirectly, by TWDC.
Shardul Amarchand Mangaldas & Co. and Khaitan & Co represented RIL and Viacom18 Private Limited (Viacom18) before the CCI in creating a JV for their entertainment business in India with The Walt Disney Company (TWDC).
TWDC and Star India Private Limited was represented by AZB & Partners.