Disney, Reliance overcome cricket concerns to win approval for $8.5 bln India merger
Reliance-Disney aim to create India's biggest entertainment company
Companies clear antitrust hurdle after cricket rights scrutiny
Both offered concessions to win approval, source says
Adds analyst comment, context of deal in paragraphs 12, 14
By Aditya Kalra and Nandan Mandayam
BENGALURU, Aug 28 (Reuters) -Walt Disney Co DIS.N and Reliance Industries RELI.NS won approval on Wednesday for an $8.5 billion merger of their Indian media assets after assuaging regulatory worries about their grip on broadcasting rights for cricket, India's favourite sport.
The CompetitionCommission of India(CCI) said the deal had been approved subject to modifications submitted voluntarily by the companies, without sharing further details. A detailed order will be issued in coming days, clearing what was seen as the biggest hurdle for the deal.
To get the merger over the line, the two companies have offered concessions, including a commitment to not raise advertising rates unreasonably for streamed cricket matches, and to sell 7-8 non-sports TV channels, a source familiar with the matter said.
The merger will create India's biggest entertainment player to compete with Sony 6758.T, Netflix NFLX.O and Amazon AMZN.O with 120 TV channels and two streaming services.
It will also give Reliance owner Mukesh Ambani, Asia's richest person, a stronger hold on the $28 billion media and entertainment sector. The regulatory nod comes a day before Ambani is set to address Reliance shareholders at its Annual General Meeting.
After asking Reliance and Disney around 100 questions related to the merger, the CCIraised concerns the newentity would control most cricket rights for TV and streaming in India, and could hurt advertisers.
Cricket has a fanatical following in India, the world's most populous country with an estimated 1.4 billion people.
Reliance and Disney have spent roughly $9.5 billion in recent years for TV and streaming rights for the world's richest cricket tournament, the Indian Premier League, the International Cricket Council's matches such as the one-day and T20 World Cups, and matches organised by the Indian cricket board.
The companies alsopledged not to bundle and sell advertising slots for different cricket tournaments, and keep subscription rates for their offerings under regulatory limits, thesource added.
Neither Reliance nor Disney immediately responded to requests for comment.
Both companies have offered free viewing of cricketmatches over the years to attract users to their streaming platforms in the hope they will then buy subscriptions.
Karan Taurani, an analyst at India's Elara Capital said the deal should close within six months as it still needs approval from an Indian companies tribunal, which is expected to be granted.
Disney and Reliance's merged entity will also own Indian broadcast rights for the Wimbledon tennis championship, MotoGP and the English Premier League, among other sporting events.
For an interactive version of this graphic: https://reut.rs/49yL83p
Jefferies has said the Disney-Reliance entity will have a 40% share of the Indian advertising market in the TV and streaming segments.
Companies spent nearly $2 billion in India in 2023 on sports industry related sponsorship, endorsement and media, media agency GroupM estimates,with cricket accounting for 87% of the spend.
Reliance RELI.NS will be the majority owner of the merged company, which will be chaired by Ambani's wifeNita Ambani, who has experience in the arts and ties with Bollywood.
K.K. Sharma, a former head of mergers at the CCI, hassaid the deal, if approved, would create "a big fish in the broadcasting market" which will practically be a "monopoly on cricket advertisement revenues".
Sports broadcast in India after Reliance Disney media merger https://reut.rs/3Tk37Vj
Sports broadcast in India after Reliance Disney media merger https://reut.rs/49yL83p
Additional reporting by Munsif Vengattil; Editing by Varun H K and Barbara Lewis, Kirsten Donovan
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