Previous CCI Letter Calling Reliance-Disney Merger Anti-Competitive Surfaces
However, the merger has already got approvals from the CCI and NCLT and the letter was issued prior to the final approval.
Before approving the Reliance and Disney merger, the Competition Commission of India had previously issued a letter to the merging entities saying that the merger could be anti-competitive. NDTV Profit has reviewed a copy of the letter issued by the CCI.
In the letter, it was mentioned that both Reliance’s Viacom18 and Disney’s Star Sports currently dominate the sports segment.
Viacom18 operates through channels like Sports18 and its OTT platform JioCinema, while Disney’s Star Sports boasts of multiple channels and its streaming service Disney Hotstar.
The regulator's assessment noted that the combined market share of these entities stands at a substantial 70.2% to 77.7% for Disney and 5.9% to 7.5% for Viacom18 for FY 2022-23 and FY 2023-24, respectively.
The letter added that the sports TV channel market is highly concentrated, with a delta HHI (Herfindahl-Hirschman index) exceeding 200. In OTT streaming, a significant portion of major sports content is controlled by the two merging parties, potentially increasing their negotiating power and ability to monetise sports rights.
The CCI's analysis also mentioned that the combined entity would have enhanced financial capacity to acquire sports rights, leading to reduced competition in bidding for such rights. Additionally, the merger could impact advertising dynamics, as the increased market power might limit competitive pricing and negotiation opportunities for advertisers.
The Commission had directed Reliance and Disney to provide written responses within 30 days to address these concerns.
However, it needs to be noted that the merger has already gotten the required approvals from the CCI as well as the NCLT and the letter is only a part of the proceedings by the CCI before doing so. It was issued prior to the final approval.
