12 ASIAN LEGAL BUSINESS – INDIA E-MAGAZINE JANUARY-FEBRUARY 2024 The proposed stock and cash media and entertainment mega-merger between Disney’s India business and Indian billionaire Mukesh Ambani’s Reliance’s media unit Viacom18 is now in its final stages, with antitrust due diligence reportedly underway. The leaders of both media giants signed a binding agreement in February, which will give Ambani’s company a controlling interest in the combined entity. The Economic Times report said that the acquisition is likely to take place with Reliance setting up a new subsidiary, which will absorb Disney’s Star India through a share swap deal. The deal also includes Reliance’s over-the-top (OTT) platform JioCinema, and Disney’s lossmaking OTT service Hotstar. Once finalised, the deal is likely to create the largest player in India’s $28 billion media and entertainment market. Competition expected from the earlier approved media merger between Zee Entertainment and Sony India also looks to be in the rearview mirror, with the deal falling out and parties engaged in dispute resolution. But its not time to sing Hakuna Matata just yet, as the deal will face tough antitrust scrutiny from India’s antitrust watchdog, The Competition Commission of (CCI), and may have to offer divestment of certain assets before final approval, legal experts say. Both Reliance and Disney have lawyered up for this stage, with the former instructing Khaitan & Co and Shardul Amarchand Mangaldas, and the latter seeking guidance from AZB & Partners. WHAT ARE THE CCI’S POTENTIAL CONCERNS SURROUNDING THE DEAL? While dominance by itself is not anticompetitive, its effect on competitors and its reliance on vertical markets is a major concern for the CCI. “Both parties are present across the entire value chain of the broadcasting industry, which comprises content production and aggregation, broadcasting and content distribution etc. Accordingly, the CCI would look at the combined market presence of parties and the level of competition in (i) wholesale supply of TV channels including in different genre like Hindi entertainment, Marathi, Bengali etc. (ii) OTT platform (iii) Supply of advertising airtime on TV channels and (iv) Production and supply of films to third-party distributors and exhibitors for theatrical release, etc,” says Vaibhav Choukse, head of the competition practice at J. Sagar Associates. Reliance and Disney, each have a major streaming service as well as 120 TV channels between them. As per the CCI’s records from 2022, Disney and Reliance’s Viacom held up to 50 percent of the general entertainment channel (GEC) TV market in India, including up to 50 percent of Hindi GEC, up to 55 percent of Marathi GEC, up to 50 percent of Bengali GEC and up to 35 percent of the Hindi film market. Competition concerns around the deal, like those analysed by the CCI in the Zee-Sony merger approved by the commission in 2022, centre on the effect of the creation of a dominant market player on the downstream market. “The assessment of CCI would focus on the effect of the deal on stakeholders such as viewers, advertisers, content producers, distributors, etc. as parties will become the largest broadcasting house in India with over 100 TV channels, making DISNEY-RELIANCE MEDIA MEGA-MERGER FACES ANTITRUST SCRUTINY BY NIMITT DIXIT REUTERS/Dado Ruvic/Illustration/File Photo u
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