How the Reliance-Disney Merger Will Reshape India’s Entertainment Industry

Reliance Dominance: What the Future Holds for the Indian Media and Entertainment Industry

Reliance-Disney Merger The Competition Commission of India (CCI) has approved Reliance Industries’ Rs 70,350-crore merger with Disney’s Indian media assets, with certain voluntary modifications. This landmark merger is poised to create a formidable media giant in India.

The CCI announced, “Commission approves the proposed combination involving Reliance Industries Ltd, Viacom18 Media Pvt Ltd, Digital18 Media Ltd, Star India Pvt Ltd, and Star Television Productions Ltd, subject to the compliance of voluntary modifications.”

Impact on the Sports Media Landscape
Reliance-Disney Merger raises concerns about a potential monopoly in the cricket broadcasting space. The combined entity will control major sports properties, including media rights for the IPL, ICC matches, and bilateral rights for the Indian, Australian, and South African cricket boards, along with other key sports events like Wimbledon and the Pro Kabaddi League.

Karan Taurani, SVP-Research Analyst at Elara Capital, highlights that the merged entity will dominate the sports market, particularly cricket, with a 75-80% share across both linear TV and digital platforms. In 2022, the sports ad market in India was valued at Rs 71 billion, with Disney India contributing 80%.

“This dominance in sports, primarily cricket, will position them to command a significant share of the advertising market, driving growth in both linear TV and digital platforms,” Taurani explains.

Concerns and Opportunities
While Ashish Bhasin, founder of The Bhasin Consulting Group, acknowledges concerns about monopolies, he trusts India’s regulatory framework to prevent any single entity from becoming too powerful. Raj Nayak, former COO of Viacom18, also dismisses monopoly concerns, noting that the merger will help the combined entity capture a larger share of ad revenues and achieve significant cost savings through operational efficiencies.

Transforming the Indian Media Landscape
The merger is set to reshape India’s media landscape by creating the largest television and digital streaming platform in the country. With 120 TV channels and two streaming services, the combined entity will reach over 750 million viewers in India and the global Indian diaspora. In FY23, Star and Viacom18’s consolidated revenue stood at Rs 24,411 crore, surpassing the combined revenue of Zee, Sony, and Sun TV.

Ashish Bhasin sees this merger as an opportunity for India to create a global impact by producing high-quality content domestically. “India has great talent, and this merger will enable us to create content that can resonate internationally,” he says.

Challenges and Strategic Considerations
Mihir Shah, Vice President of Media Partners Asia, believes the new joint venture will leverage its scale and synergies in TV and streaming to compete more effectively against global digital giants. However, the industry will need to address past challenges, such as under-indexing advertising spend relative to GDP and the rising content costs in streaming.

Raj Nayak predicts that the merged entity will achieve a dominant market position with a 35-40% share, allowing it to leverage its scale for better operational efficiencies and revenue growth. Taurani adds that a potential merger of streaming platforms JioCinema and Disney+ Hotstar could challenge global OTT platforms in India, a price-sensitive market.

Conclusion and Future Outlook
As the Reliance-Disney Merger progresses, synergies between the entities are expected to unfold over the next six months to three years. According to Bhasin, “It’s essential to minimize overlaps and align cultures to ensure a smooth integration.” Raj Nayak, who has experience working with both organizations, believes that their strong professional cultures will facilitate this process.

With the CCI’s approval paving the way, the merger is expected to close by January 2025, pending final approvals from the National Company Law Tribunal (NCLT), shareholders, and the Ministry of Information and Broadcasting (MIB).

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