Despite CCI’s conditional nod for the nearly $8.5 billion media merger between Disney and Reliance experts believe that the merger would continue to have negative impact on market competition in the media space.
Reliance has submitted to the antitrust regulator that it will make good faith modifications to preserve competition but regional TV channels and global streaming giants, both can expect tougher conditions going forward after the merger is completed.
“We believe other linear TV broadcasters, such as Zee, SUNTV, and TVT, may not be able to grow ahead of market average or gain market share, due to advantages that RIL-Disney,” said Karan Tuarani of Elara Capital explained.
“Even MNC OTT giants like Amazon and Netflix could see the negative impact due to RIL-Disney, as they may not be able to hike prices significantly and may need to invest more in content to match free content offerings by Jio Cinema,” he added.
“We are excited about this partnership. I warmly welcome Disney to the Reliance family,” Mukesh Ambani said, speaking at the 47th Annual General Meeting for Reliance Industries.
Analysts also said that a Reliance-Disney will comply with the voluntary modifications which include prevention of monopolistic practices particularly for their cricketing business.
Reliance has reportedly committed to not hiking up ad rates as well as keeping streaming of matches free on their digital streaming platform for the next two years. Effectively allowing status quo to prevail.
“Disney-Reliance have made the commitment to preserve the market dynamics of the media industry even as they come to merge the two largest businesses in India’s media sector at present,” Ajimon Francis, Managing Director at Brand Finance India told businessline. Francis, however, highlighted, “we will all have to see how the market dynamics will emerge in the future.”
Nonetheless, CCI’s conditional nod has removed regulatory overhang from the merger which will likely be completed by February 2025.
Tuarani explained, “The Disney-RIL merger CCI nod clears the way to create India’s largest M&E entity valued at $8.5 billion or ₹700 billion. The merger announcement had come in February. We believe the CCI approval was a major roadblock, given the size of the entity, as it controls 40 per cent of India’s TV market and 33 per cent of the OTT market. This would pave the way for other regulatory approvals – National Company Law Tribunal (NCLT), Ministry of Information and Broadcasting (MIB), exchanges and shareholders, which may take another 3-4 months. Therefore, we expect the merger to close by January-February 2025.”
In his address, Mukesh Ambani said, “We are combining content creation with digital streaming,” Ambani said, outlining a strategy to “deliver unparalleled content at affordable prices” across the spectrum of consumer tastes.
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