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Dishaa Dand and Anand Vardhan are third year law students, pursuing B.A. L.L.B (Hons.) from Gujarat National Law University
In the realm of media and entertainment, mergers and acquisitions have become emblematic of media Moghuls fortifying their market presence, enhancing bargaining power and expanding their influence. The trend did not come to an end with the failure of the Zee-Sony merger. In February 2024, Reliance Industries Limited (“Reliance”), Viacom 18 Media Private Limited (“Viacom18”) and the Walt Disney Company (“Disney”) announced a joint venture agreement (“JV”) which would combine the businesses of Viacom 18 and Star India Private Limited (“Star India”). The consequence would be creation of an entertainment behemoth in the media market of India, controlled by RIL with 16.34% stake, 46.82% by Viacom18 and 36.84% by Disney.
From a commercial perspective, this merged entity would be a perfect amalgamation of two media stalwarts in the Indian market, becoming a dominant force in the industry. However, such merger raises significant competition concerns.
Against this backdrop, the authors draw from the Competition Commission of India’s (“CCI”) approach in the Zee-Sony Merger to analyse the market implications of the merger at hand. This article argues that the merger at hand would lead to market concentration and that the CCI would have to impose more stringent behavioural and structural remedies.
Market Implications of the Merger
Under the agreement, the media operations of Viacom 18 would be merged with Star India (“merged entity”). This proposed 8.5-billion-dollar merger is set to establish the most powerful media houses of India. Disney boasts a portfolio of about eighty televisions channels across nine languages, and Viacom18 has forty channels across eight languages. Consequently, this merged entity would wield influence over a cumulative total of 120 television channels in the Indian market.
Additionally, this merged entity would command control over two Over the Top (“OTT”) platforms in India: Disney Hotstar and Jio Cinema. Disney Hotstar maintained its dominant position in the Indian OTT market with a 41% market share as of 2023. Meanwhile, Jio Cinema commanded a 6% share. Collectively, the merged entity will establish a significant market share in the OTT sector, surpassing its competitors like Prime Video (22%) and Netflix (13%).
Moreover, the merged entity would dominate cricket broadcasting in the country. Jio Cinema holds the digital broadcasting rights for the popular Indian Premier League, while Disney owns the television broadcasting rights for the same. Notably, Disney’s Star India also secured the overall rights for broadcast of International Cricket Council events during 2024–2027, including the prestigious Cricket World Cup.
Analyzing the market implications – In light of CCI’s approach in the Zee-Sony Merger
In 2022, the CCI approved the now-failed merger of Zee Entertainment Enterprises Ltd with Sony Pictures Networks India Pvt. Ltd. and Bangla Entertainment Pvt. Ltd, both being entities of the Sony Group Corp (“Zee-Sony Merger”). The entity was to exercise control over 92 television channels as well as two OTT platforms: Zee 5 and Sony LIV. In the Zee-Sony Merger, the CCI noted that the proposed merger was prima facie likely to cause an appreciable adverse effect on competition in India.
This merger, hailed in its time, as the perfect match between media powerhouses in India, shares similarities to the Reliance-Disney merger at hand. Since Viacom18 and Star India are two of their biggest competitors in the industry, CCI’s order approving the Zee-Sony Merger has details relating to their market share as well.
In the Zee-Sony Merger, the CCI delineated the ‘market for operations and wholesale supply of TV channels in India’ as one relevant market. This market was further sub-segmented into general entertainment channels (“GECs”), Films, etc. They were further sub-sub-segmented on linguistic basis. In this market, the Zee-Sony merger was approved specifically because their share in the market, as a combined entity, would be less than 40%. That very order depicts that the Disney-Reliance merged entity could face strict scrutiny owing to the fact that their market share in this relevant market would likely be higher than 40-50%. More specifically, their share in the Marathi language market would exceed 65% and 50% in the Bengali Language Market.
Another relevant market delineated by the CCI was the ‘market for retail supply of OTT AV content in India’. In that market, the Zee-Sony Merger received the regulator’s greenlight as their combined share was a mere 10%. In contrast, the share of the Reliance-Disney Merged Entity is likely to reach higher than 40% in this market.
In the Reliance-Disney Merger, while the overall control over Television and OTT content is bound to be scrutinized, the cricket broadcasting rights could be in the spotlight due to their combined dominance and high market share in the area.
It is also pertinent to note that the Zee-Sony Merger’s antitrust regulatory approval is also credited to the structural remedies to shut down or sell off certain general entertainment channels, to reduce their market share.
The Antitrust Ramifications
Similar to the Zee-Sony Merger, it is likely that the CCI finds this merger to prima facie create an AAEC in India. Reports state that both, Reliance and Disney, have initiated the antitrust diligence process.
While the deal is commercially strategic, if successful, the market share in OTT platforms could further be concentrated only amongst a few companies. The result would be over 90% of the market being controlled by just those few. Such high level of dominance could have two-fold consequences. First, heightening difficulties for new entrants wishing to penetrate the market. Second, and most importantly, allowing dominant players to dictate industry standards and prices. Consequently, smaller players may be forced to reduce their prices to a point of diminished viability in that market. With such considerable market power, the risk of collusion and anti-competitive behaviour becomes increasingly likely.
Specifically with respect to broadcasting rights to the Indian Premier League, the merged entity would completely monopolize the market, with television as well as digital broadcasting rights. The popularity and significantly large viewer base of the league raises concerns as to how such merged entity would hold complete control of determining prices for subscribers and viewers.
Conclusions and Way Forward
In the global commercial landscape, it is common practice amongst entities operating within the same industry to combine their assets, thereby creating a resultant entity with higher assets, enhanced bargaining power and an expansive market presence. Such mergers have the potential to result in entities which could wield substantial influence over the industry.
In such cases, it would become important for the competition regulator to consider the broader implications of such mergers. A mere assessment of market shares within the relevant markets may not be sufficient. Instead, a holistic approach that would evaluate the potential consequences on competition as well as consumer choice is essential. In this regard, it is recommended that the regulator authority, in addition to structural modifications, also prescribe behavioural mandates when approving the mergers. Such steps would keep the entities in check, fostering competitive markets and preventing any anti-competitive conduct likely to arise at a future point in time.
