Reliance, Disney warned that $8.5 billion media merger could harm competition: Report

Competition Commission of India has privately told Disney and Reliance its view and asked the companies to explain.

India's antitrust body reached an initial assessment that the $8.5 billion merger of Reliance and Walt Disney media harms competition due to their power over cricket broadcast rights. News agency Reuters reported that the Competition Commission of India (CCI) has privately told Disney and Reliance its view and asked the companies to explain why an investigation shouldn't be ordered. This marks the biggest setback so far to the planned merger.

Disney and Reliance logos are seen in this illustration (Reuters)

A source in the know said, “Cricket is the biggest pain point for the CCI" and experts warned the merger, which was announced in February, could face intense scrutiny as it will create India's biggest entertainment player which will compete with Sony, Zee Entertainment, Netflix and Amazon with a combined 120 TV channels and two streaming services.

Earlier, it was reported that the CCI privately asked Reliance and Disney around 100 questions related to the merger and the companies said that they are willing to sell fewer than 10 television channels to assuage concerns about market power and win an early approval. The companies can still address the concerns of the CCI by offering more concessions, another source said, adding that the notice for now "is a precursor of things getting complicated."

"The notice means that initially the CCI thinks the merger harms competition and whatever concessions offered are not enough," the source said, adding that the CCI has given the companies 30 days to respond and explain their position.