The Competition Commission of India (CCI) on October 22 published a non-confidential version of the order that approved the $8.5 billion merger between Reliance Industries and Disney's Indian media assets.
Approved in August 2024, the CCI’s announcement itself stated that the deal was given a go-ahead subject to certain ‘voluntary modifications’. Voluntary modifications are suggested by parties seeking approval for their transactions when the CCI raises concerns about the adverse effects of a deal.
Interestingly, the CCI in its meeting held on August 14, was of the prima facie view that the deal would create an adverse effect on the market relating to sports broadcast in India. The Commission had opined that both Disney Hotstar and Viacom18’s Jio combined would create an adverse impact in the market of cricket broadcasting as they have rights for cricketing events such as the Indian Premier League (IPL) and other tournaments conducted by the International Cricket Council (ICC) and the Board of Control for Cricket in India (BCCI).
Subsequently, the CCI issued a show cause notice (SCN) to the parties asking them why an investigation should not be conducted on this aspect. The Commission noted that the combination would likely have effect on pricing for advertisers in the broadcast/streaming of sports.
The parties to the merger (Reliance and Disney) responded to the notice and offered to provide certain voluntary modifications (VPMs) to the terms of the merger to avoid the investigation and to get an approval for the deal. The order said,
“It is submitted that these commitments will ensure that until the current cycle of rights subsist, the Parties will have to act fairly and reasonably and will not be able to increase advertisement rates to unreasonable levels. This will also ensure that the higher negotiating power, if any, is not misused and advertisers and consumers continue to benefit from the existing competitive pricing and choice.”
According to the order, the parties undertook to:
Not bundle together the TV ad slot sales for all three cricketing rights available with them - IPL, ICC and BCCI - for the balance tenure of the existing rights (till the time they have the rights to broadcast these cricketing events).
Not bundle together OTT ad slot sales for all three cricketing rights available with them for the balance tenure of the existing rights.
Not bundle together ad slot sales for IPL on TV and IPL on OTT for the balance tenure of the existing rights.
Ensure implementation of Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act 2007 in letter and spirit.
Procure to supply the advertisement space on their streaming platforms on fair, transparent and non-discriminatory terms till the current rights held by them expires.
Not increase the advertisement rates to an unreasonable level, on their TV and streaming platforms for ICC events and IPL events, for which they hold the broadcasting rights as on date.
Further, they said that the major cricketing events for which they currently hold rights will be broadcasted on their TV channels and streaming platforms on either an advertisement-based model or a subscription model, or a hybrid model. In case of subscription model or hybrid model, the fee for the same will be charged as per industry standards.
The parties further gave VPMs to address possible concerns that the Commission may have, keeping in view their presence in various segments/sub-segments. According to the order, the parties undertook to divestment in channels in certain segments, such as:
Star Jalsha Movies and Star Jalsha Movies HD, operated by SIPL, in the Bengali Film Channel sub-segment;
Colors Marathi and Colors Marathi HID, operated by Viacom18, in the Marathi sub-segment;
Colors Super, operated by Viacom18, in the Kannada sub-segment; and
Hungama and Super Hungama, operated by SIPL, in the Kids’ Channel segment.
The Commission was informed that as a result of this divestment, the overlap in the Bengali Films segment and Marathi segment will cease to exist. According to the order,
“The combined market share in the Kannada GEC would reduce and JV will also continue to be constrained by Zee, which had a comparable market share. Similarly for Kids’ Channel segments the combined market share will decline and there are several competitors in the market, such as Warner Bros., Sony, and SunTV, which will continue to constrain the JV in this segment.”
The CCI also directed the appointment of a nodal officer to monitor the progress of the transaction, within 15 days from the date of the receipt of the order.
“The Nodal Officer shall ensure that the Commission is kept fully informed about the process and progress made in relation to implementation of the Sale of the Divestment TV Channels until the Monitoring Agency is appointed. After the selection of the Monitoring Agency, Nodal Officer shall inform about the progress made in relation to the implementation of the commitments to the Monitoring Agency only.”
[Read order]