As India’s antitrust regulator, the Competition Commission of India (CCI) expressed its reservations regarding the forthcoming merger between Disney and Viacom18, experts argue that CCI’s concerns are unfounded. On Tuesday, CCI reached the initial assessment that the $8.5-billion media merger between Disney and Viacom18 will harm competition in the media sector due to their power over cricket broadcasting rights. Experts note that given that ownership of rights is impermanent and the rights will be up for auction again in a few years, it should not impede the regulator from allowing the merger to go through. 

Currently, Viacom18 holds digital rights to broadcast the Indian Premier League (IPL) between 2023 and 2027. They hold both linear and digital rights for the Women’s Premier League for the same time period as well. 

Disney holds ICC (International Cricket Council) media for international matches rights in that period. Disney also holds linear broadcasting rights for IPL.

Consolidation

This merger has been largely motivated by the desire to consolidate India’s cricket entertainment under one banner. Cricket holds the entertainment pulse of the country; with this merger, Disney-Viacom will have a clear monopoly as far as sports entertainment goes. This consolidation will aid the merged entities in their streaming business as well. 

Therefore, it is only natural that cricket has emerged to be the biggest pain-point for CCI. It has asked the companies to give an explanation within 30 days on why an investigation should not be ordered. 

Experts say CCI’s argument is invalid. Abhishek Malhotra, a prominent TMT lawyer, said, “As per the CCI Act, it must be ensured that the enforcement of competition law is not at odds with the preservation of IP. The regulator will likely adopt a wait-and-watch approach allowing both the entities to merge and keep a lookout for any exceedingly anti-competitive practices like hiking up of ad rates etc.”

Karan Tuarani of Elara Capital added, “Cricket rights are impermanent, they cannot be a basis on which CCI denies this merger. Moreover, the content costs that both companies paid to get these rights are so high that they are struggling to break even. It remains to be seen if they will renew their rights, going forward.”