Will impending media mergers create a duopoly?

Walt Disney Co. is in talks to sell its India entertainment TV and streaming businesses, with Reliance Industries among the potential buyers.

The Walt Disney Co. is in talks with potential buyers for its India entertainment television and streaming businesses under Disney Star, reported Bloomberg on Tuesday. Among likely suitors is Reliance Industries Limited (RIL) which controls Viacom18 Media’s broadcasting business and streaming service brand JioCinema, the report said.

Will impending media mergers create a duopoly?

India’s broadcast media sector is buzzing as the Sony-Zee merger, approved by the Competition Commission of India (CCI), is nearing completion. In case Disney Star and Viacom18 too join hands, it will likely alter the country’s entertainment TV business with the emergence of a duopoly, exerting pressure on consumers, cable distributors and advertisers to pay more given their scale.

Karan Taurani, analyst at Elara Securities said the TV industry may turn into a duopoly if the Disney-RIL deal fructifies as on the television side the two merged entities --- Zee and Sony and Viacom18 and Disney Star -- will have an advertising revenue market share of 25% and 45% respectively (as of FY22).

Together, Disney Star and Viacom18 could boast of 100 plus channels in entertainment, sports, youth and kids’ genres. “In case of Viacom18 and Star, there could be a potential shut down of multiple channels by CCI (Competition Commission of India), as they have a big overlap on the regional/urban general entertainment side as compared to Zee/Sony which had a relatively lower overlap,” Taurani said.

Ravisekhar Nair, Partner, Economic Laws Practice said the question whether such a deal will go through will depend on the CCI’s assessment – it will consider all markets where the parties are present, their market shares, and the likely effect of the transaction on such markets. “A potential sale of Disney’s TV and streaming business in India to Viacom18 would likely result in two major players leading to lasting structural changes in the market. If notified, the CCI is likely to consider the impact of such a transaction in the downstream market as well and its eventual impact on end-consumers, especially in terms of higher prices for TV channels,” he said.

Underplaying the threat of a duopoly, a broadcasting company executive said that small regional language channels are still popular, they offer choice to the consumer and lead to fragmentation of viewership.

Besides, one need not worry about TV duopolies as it is a sunset industry, said media industry expert Anuj Gandhi. Pay TV homes have declined from 130 million two years ago to 100 million and the number may stabilize at 65-70 million for a bit, he said. Big broadcasters’ pay TV channels also face competition from free-to-air channels on offer on DD Free Dish which corner at least ₹2000-2500 crore a year in advertising, he added.

“There’s been a fundamental shift in the media landscape. Linear TV is declining and bulk of advertising is going into digital. Ad spends on digital media will be higher than on TV this year,” Gandhi said. Ad agency Dentsu’s digital media report estimated India’s total digital advertising market at ₹29,784 crore for the year 2022 and ₹51,110 crore for 2024. TV’s 40% share of advertising in 2022 is expected to decline with digital moving up its share to 40% in 2023 from 35% last year.

Consolidation of streaming services isn’t a cause of worry either as digital media viewership and advertising is highly fragmented. While Google and Meta remain the largest ad platforms in digital media, there is increased competition for the advertising rupee from e-commerce marketplaces like Amazon and Flipkart, as well as advertiser-driven OTT services like JioCinema.

Though, over the years, even Google, which owns YouTube, and Meta’s (Instagram, Facebook and WhatsApp) duopoly may have lost ground. Their combined share of ad market is said to have declined challenged by the enormous proliferation of other digital media platforms like gaming, streaming services, short form video and social commerce etc.

But if the Disney and Viacom deal happens, the one segment which needs to be red- flagged for absolute monopoly will be live sports. Viacom18 just bagged the BCCI media rights for all international and domestic cricket matches played in India for both TV and digital for the next five years. The Indian Premier League is already split between Disney Star and Viacom18. Disney Star also owns digital rights for ICC’s Men’s Cricket for four years besides Cricket Australia, the English Premier League and Wimbledon. Viacom18 recently picked the rights to Indian Super League football.