Antitrust Scrutiny Intensifies for Disney-Reliance Media Merger

The proposed merger between Disney’s India business and Mukesh Ambani’s Reliance’s media unit Viacom18 is progressing towards its final stages, with antitrust due diligence reportedly underway. The leaders of both entities signed a binding agreement in February, signaling Ambani’s company’s controlling interest in the combined entity.

According to reports from The Economic Times, the acquisition is likely to materialize through Reliance establishing a new subsidiary, which will absorb Disney’s Star India through a share swap deal. Additionally, the deal encompasses Reliance’s OTT platform JioCinema and Disney’s Hotstar, despite the latter’s current losses.

If finalized, the merger is poised to create the largest player in India’s $28 billion media and entertainment market. Previously anticipated competition from the Zee Entertainment and Sony India merger has diminished, with the deal collapsing, leading the involved parties into dispute resolution.

However, the merger must withstand rigorous antitrust scrutiny from India’s Competition Commission (CCI). Legal experts caution that divestment of certain assets may be necessary for final approval.

Related: Antitrust Scrutiny Looms Over Proposed Disney-Reliance Merger in India

Both Reliance and Disney have engaged legal counsel for this stage, with Reliance represented by Khaitan & Co and Shardul Amarchand Mangaldas, and Disney seeking guidance from AZB & Partners.

The CCI’s potential concerns regarding the merger revolve around its impact on competitors and reliance on vertical markets. Vaibhav Choukse, head of the competition practice at J. Sagar Associates, outlines key areas of scrutiny, including market dominance in TV channel distribution, OTT platforms, advertising airtime, and film production and distribution.

The combined entity’s significant presence across the broadcasting industry, boasting a plethora of TV channels and streaming services, raises red flags for antitrust regulators. Data from 2022 indicates that Disney and Reliance’s Viacom18 held substantial market shares in various segments, including the general entertainment channel (GEC) market and the Hindi film market.

As the merger progresses through regulatory hurdles, industry observers await the CCI’s decision on the potential divestments required to address competition concerns.

Source: Legal Business Online