A merger of Disney's India business and Reliance's media unit Viacom18 would create an entertainment powerhouse in the world's most populous nation but is likely to face an intense antitrust review. This is reported by Reuters, citing the opinion of Indian lawyers.
A merger of Walt Disney's India unit and billionaire Mukesh Ambani's media business would create an entertainment powerhouse in India, but lawyers say any deal would draw intense antitrust scrutiny and assets would likely need to be shed.
Disney and India's Reliance, which each have a major streaming service as well as 120 TV channels between them, are looking at merging into an entity in which Ambani's group would likely have a majority stake, sources said this week.
Reliance's JioCinema and Disney's Hotstar would have a combined library of 200,000 plus hours of content that includes television dramas, movies and sport events.
In particular, a deal could benefit Disney whose Hotstar streaming app has been loss-making. CEO Bob Iger said last month that while Disney's TV channels were doing well in India, other parts of the business were struggling and it was seeking to "improve the bottom line."
If a deal was struck, it would be the second to seismically reshape India's TV and streaming landscape as Japan's Sony also plans to merge its India business with India's Zee Entertainment.
The Zee-Sony plan cleared a review by the Competition Commission of India (CCI) last year and could close in the coming weeks. The two companies have said they will divest three of Zee's Hindi TV channels as part of their agreement for regulatory acceptance.
Although Netflix and Amazon also compete in India's $28 billion media and entertainment market, the emergence of two behemoths would probably create a duopoly wielding anti-competitive power over advertisers, users and content creators, antitrust lawyers said.
Disney's streaming content includes global blockbusters, movies from the Marvel universe as well as National Geographic documentaries. It streamed seven out of the top 15 most-watched original shows in India in 2022, according to a report by media consulting firm Ormax.
The regulatory examination of Disney and Reliance’s streaming services and their ability to advertise during cricket, an intensely popular sport in India, would be crucial.
Disney Hotstar, India's biggest streaming app with 38 million users, owns the rights for International Cricket Council's matches in India until 2027, while Reliance's growing JioCinema app has the rights for popular cricket league IPL.
The CCI would be worried that the combined entity, due to its strong market presence in streaming can command their own rates and advertisers will be left without bargaining power, antitrust lawyers say.
In TV too, there is much that might displease regulators. Viacom18's 38 channels include Comedy Central and Nickelodeon, while Disney, whose Star brand has been a household name for decades in India, has 80. Elara Capital estimates Disney and Viacom18 together will have the biggest share of the TV ads market at 43% while Zee-Sony would have 25%, making it difficult for others to compete.
The CCI should also take into account the market shares of the parties in the Hindi, Marathi and Bengali languages entertainment channels sector. If it exceeds 40-50% in any market, CCI is likely to conduct a detailed investigation.
Sources: The Economic Times, Reuters
