The Competition Commission of India (CCI) has approved for the merger of Reliance Industries’ Viacom18 with Walt Disney’s Star India. On October 22, CCI published 48 pages of detailed order approving the merger. This move will create the largest media and entertainment entity in India. However, the commission has kept specific conditions for approval, which is to maintain fair competition in the media landscape.
This merger is of approximately Rs 70,352 crore, and brings together two significant players in the Indian television and streaming sectors, with Reliance Industries (RIL) taking control of the merged entity. After the merger, RIL is set to have a 56% stake whereas Disney will keep a 37% stake, and Bodhi Tree Systems, led by Uday Shankar and James Murdoch, will own the remaining 7%.
Divestment of TV Channels
Following the conditions, both the companies will divest seven TV channels and this is to ensure there’s no monopolistic behavior in the media industry. The channels include popular kids’ entertainment networks, Hungama and Super Hungama, which will be sold off as a condition of the deal.
Ad Slot Restrictions for Cricketing Rights
One of the most important voluntary promises made by both companies is to not bundle advertising slots for high-demand cricket rights, like the Indian Premier League (IPL), International Cricket Council (ICC) tournaments, and Board of Control for Cricket in India (BCCI) matches. This shall be followed until the current rights contracts expire. The CCI order stipulates that this applies to both TV and OTT platforms, ensuring that the merged entity cannot create an unfair advantage in ad sales by bundling these lucrative sports rights.
Additionally, the companies have agreed not to raise advertising rates on TV or digital platforms for IPL and ICC events to unreasonable levels during the remainder of their existing rights agreements.
Strategic Implications
The merger is highly profitable for Reliance Industries as it will boost its position in the rapidly growing Indian media and entertainment market. With RIL’s significant investment of Rs 11,500 crore into the merged entity, the company has now committed over Rs 22,000 crore to this sector, underscoring its strategic interest in dominating both traditional and digital media.
Disney, whose interest has been more on its digital ventures, specifically Disney+ Hotstar, will continue to play a pivotal role in the merged entity. In fact, as per insider information, Disney+ Hotstar will likely emerge as the primary streaming platform after the merger, which will eventually dissolve Viacom18’s JioCinema.