The Media and Entertainment (“M&E”) industry, consumed by audiences across demographics and various platforms such as television, films, out-of-home, over-the-top (“OTT”), radio, animation, and visual effect, music, gaming, digital advertising, live events, filmed entertainment, and print, has witnessed significant developments in the past decade or so and is expected to grow to INR 3.08 Tn by 2026 at 10-12% CAGR. Undoubtedly, the coming together of Reliance-Disney in the M&E space, which brings together the media assets of India’s largest conglomerate Reliance Industries and entertainment giant Walt Disney, had sparked both excitement and concerns over potential monopolistic dominance in the Indian entertainment and advertising industries. The said merger / combination is expected to be a game-changer in the M&E industry in India that will pose intense competitive pressure upon other OTT platforms such as Netflix, Amazon Prime, Sony LIV etc. In recent times, India has witnessed increasing number of OTT platform users while the viewership of TV has gone down. Most of the sports content such cricket International Cricket Council (“ICC”), cricket Indian Premier League (“IPL”) and other Board of Control for Cricket in India (“BCCI”) matches etc. are streamed on either of the two OTT platforms – JioCinemna and Disney + Hotstar.

In August 2024, the Competition Commission of India (“CCI”) approved USD 8.5 billion (approx.) merger of Indian entertainment businesses of Viacom 18 Media Private Limited (“Viacom18”) and The Walt Disney Company (“TWDC”) so that Star India Private Limited (“SIPL”) becomes the joint venture/resultant entity between Reliance Industries Limited (“RIL”), Viacom18, and TWDC (through its subsidiaries) (“JV/Resultant Entity”). The JV / Resultant Entity post - merger will be operating more than 100 TV channels and OTT platforms, namely, JioCinema (currently owned by Viacom18) and Disney + Hotstar (currently owned by SIPL).

At present Viacom18 and SIPL owns the cricket streaming rights (TV Channels as well as OTT platforms) of the matches organized by BCCI, ICC, and IPL until 2027. These rights have been acquired by them via a competitive process of bidding organized by the concerned authorities. The CCI in its order of approval had raised competition concerns in sports segment that may arise post - merger as these two entities will cease to compete for fresh bidding of the sports rights in 2027. The JV / Resultant Entity will also attain increased ability to influence other fees and charges to end consumers and advertisers. In addition to this, CCI also raised various other competition concerns which have been discussed later in this article.

To address the competition concerns raised by the CCI, the parties offered modifications & commitments that involved divestment of seven channels, transfer of certain voting rights amongst entities, and commitments in the sports segment related to unreasonable pricing, bundling of sale of advertisements etc. The CCI accepted the modifications & commitments offered by the parties and approved the said-merger subject to the same.

DEAL STRUCTURE

This Combination heralds a convergence of creative content and technological infrastructure, promising profound implications for both industries. The agreement is positioned as a major consolidation in India’s television and digital streaming landscape, combining prominent media properties in entertainment (such as Colors, StarPlus, StarGold) and sports (such as Star Sports and Sports18). This Deal promises access to highly anticipated events across both television and digital platforms, facilitated by JioCinema, RIL’s popular streaming service in India, and Disney+Hotstar. The Deal is valued over INR 711,370,000,000 (Indian Rupees Seven Hundred and Eleven Billion Three Hundred and Seventy Million) (approx. USD 8.5 billion) with RIL holding 16.34% (sixteen point thirty two percent), Viacom18 holding approx. 46.82% (forty six point eight two percent), and Disney retaining 36.84% (thirty six point eight four percent) of the combined entity.

Parties to Combination: The parties to the said Combination included – RIL, Viacom18, SIPL, Star Television Productions Limited (“STPL”) and Digital18 Media Limited (“Digital18”). A chart depicting corporate structure of parties is provided below:

Corporate Structure of the Parties


Multiple stages of the Transaction: The CCI in its order noted that the Combination is subject to the inclusion and exclusion of certain identified businesses of the parties by way of a series of transactions and will take place pursuant to the following Stages / transactions:

1. Slump Sale of Viacom 18: Slump sale & demerger of businesses of Viacom18 to its wholly owned subsidiary Digital 18.


2. RIL Subscription: Subscription of shares of TWDC owned SIPL by RIL.


3. Paramount Buy-out: Acquisition by RIL of certain equity shareholding in Viacom18 from Paramount Global owned MTV Asia and Nickelodeon Asia.


4. STPL Merger: Merger of STPL and SIPL.


5.  Transfer of shareholding in TataPlay to the JV/Resultant Entity: Transfer of some or all shareholding (direct or indirect) of affiliates of Disney Entities in TataPlay to the JV/Resultant Entity.

6. Acquisition of certain shareholdings by Viacom18 from RIL and TV18: Acquisition of 65% shareholding in Football Sports Development Limited (“FSDL”) and 50% in IndiaCast Media Distribution Pvt. Ltd. (“IndiaCast”) by Viacom 18 from RIL and TV18, respectively.


7. Acquisition of assets, liabilities, and trademarks: Acquisition of certain assets and liabilities of the Disney Entities by SIPL and acquisition of certain trademarks by Disney Entities from SIPL. 


 

Final Shareholding of the JV/ Resultant Entity:


COMPETITION ASSESSMENT BY CCI VIS-À-VIS MODIFICATIONS OFFERED BY THE PARTIES

Section 6 of the Competition Act, 2002 mandates that any merger or acquisition that crosses the asset or turnover thresholds of INR 450 crores (Indian Rupees Four Billion Five Hundred Million) (approx. USD 5,36,63,715) and INR 1250 crores (Indian Rupees Twelve Billion Five Hundred Million) (approx. USD 14,90,65,875) respectively, should be notified to CCI to ensure that it does not adversely affect market practices, balance, and competition. The parties had, accordingly, notified the CCI for breaching the statutory thresholds in as consequence of the proposed merger and have received approval for the same, subject to certain modifications.

The deal / merger raised significant competition law issues that were to be carefully analyzed by CCI. This involved defining the relevant markets, both in terms of product (media and entertainment, telecommunications, and retail) and geography (primarily India, but also internationally due to Disney’s global presence). The market concentration and dominance of the JV/Resultant Entity was assessed through market share analysis and the Herfindahl-Hirschman Index (HHI) to quantify post-merger changes in market concentration. High combined market shares and a significant increase in HHI would indicate potential dominance and reduced competition. The analysis would also consider potential barriers to entry, vertical integration concerns, and the likelihood of exclusionary practices that could harm competitors.

The CCI’s scrutiny also extends to the vertical integration and overall market control that JV/Resultant Entity would possess. Both RIL and TWDC have presence across the entire broadcasting value chain, which includes not only content production and distribution but also advertising. The CCI would also have evaluated whether this vertical integration could lead to discriminatory practices against downstream partners, such as distribution platform operators and advertisers.

HORIZONTAL OVERLAPS

1. Competition concerns in Sports

The CCI noted that both Viacom18 and TWDC / SIPL are present in bidding for sports rights, and they currently hold exclusive rights for broadcasting & streaming of all major cricket events in India for a period of three to four years. CCI also noted that Viacom18 and TWDC / SIPL broadcast these sports rights through TV channels owned by them and on their respective OTT platforms, namely, JioCinema and Disney + Hotstar. Most of the sports content such ICC cricket, IPL etc. are streamed on either of these OTT platforms. Regarding market shares, CCI observed that the Sports TV channel segment in India is highly concentrated. Viacom18 and TWDC / SIPL in last two years have held market shares 5-10% and 70-80% respectively. And the competitors Sony and Doordarshan have held only 5-20% and 5-10% respectively.

In view of the above facts, CCI prima facie opined that:

  1. The JV/Resultant Entity will have enhanced negotiating power and ability to monetize the sports rights through subscription and advertising, as the parties will hold television and digital rights of all major live cricketing events, including ICC and IPL, until 2027.
  2. Viacom18 and TWDC / SIPL are close competitors for sports rights and the JV/Resultant Entity would gain larger financial capacity to acquire various sports rights as sports rights are mostly awarded to the highest bidder.
  3. Currently, Viacom18 and TWDC/SIPL compete for the advertisers, and post combination / merger, there may not be adequate competition to offer advertisers competing prices. The same may also result in advertisers not being able to negotiate with the parties post the proposed combination / merger.   

Modifications & Commitments offered by the Parties: To address the aforesaid competition concerns raised by the CCI, the parties offered following commitments in their Voluntary Proposal for Modifications II (“VPM II”):

  1. With respect to TV and OTT Ad slot sales, parties submitted that they will not bundle the TV and OTT Ad slot sales for all three cricketing rights (IPL, ICC, and BCCI) available with them, for the balance tenure of the existing rights.
  2. Additionally, parties also submitted that they will not bundle together Ad slot sales for IPL on TV and IPL on OTT for the balance tenure of the existing rights.
  3. With respective pricing, subscription fee, charges etc., parties submitted to ensure:
  • supply advertisement space on their streaming platforms on fair, transparent, and non-discriminatory terms.
  • not to increase the advertisement rates to an unreasonable level on their TV and OTT platforms for ICC and IPL events.
  • for their subscription or hybrid model, to charge subscription fee to their viewers in commensurate with Industry standards and would adhere to subscription rates as per Telecom Regulatory Authority of India (“TRAI”) Regulations. 
  • implementation of Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, in letter and spirit.

CCI’s assessment of VPM II: The CCI observed aforesaid commitments offered by the parties will impose reasonable restrictions upon the ability of the JV / Resultant to increase the prices of their sports TV channel and OTT platforms post combination and restrict them from bundling the TV & OTT Ad slots or increasing prices for consumers and advertisers beyond a reasonable level.

2. Competition concerns in TV Channels Market

The CCI assessed competition concerns relating to the horizontal overlap existing amongst the parties in the broad relevant market of “operation and wholesale supply of TV channels in India” and in the narrow segments of the TV Channels Market based on genres, and further sub - segments of general entertainment channels (“GEC”) and film channels based on language. The CCI noted that the parties have significant combined market shares in various narrow segments and sub-segments. Thus, the JV/Resultant Entity post-merger would have high market shares as well as the ability and incentive to raise prices for advertisers, consumers, Distribution Platform Operators (“DPOs”), and all participants in the value chain. With respect to sub-segments of Bengali GEC, Hindi GEC and Hindi Films, CCI noted that there appear no competition concerns as there are other competitors in these segments and the incremental market share of the JV / Resultant Entity is insignificant. However, with respect to competition concerns and high incremental market share of the JV / Resultant Entity in other sub-segments, the CCI accepted the modifications offered by the parties through Voluntary Proposal for Modifications I (“VPM I”).

Modifications & Commitments offered by the Parties: To address the aforesaid concern of the CCI in the TV channels market, especially in the sub-segments of Marathi GECs, Kannada GECs, Telugu GECs Telugu Films, Bengali Films, Kids channel segment and Infotainment & Lifestyle segment, the parties offered following modifications:

i. Divestment of following TV channels:

  • Bengali film channel sub-segment: divestment of ‘Star Jalsha Movies’ and ‘Star Jalsha Movies’ HD operated by SIPL.  
  • Marathi GEC sub-segment: divestment of ‘Colors Marathi’ and ‘Colors Marathi HD’ operated by Viacom18.
  • Kannada GEC sub-segment: divestment of ‘Colors Super’ operated by Viacom18.
  • Kids channel segment: divestment of ‘Hungama’ and ‘Super Hungama’ operated by SIPL.  

ii. RIL group to transfer 24.5% of voting rights held by TV18 in ETPL to ETPL’s promoters and an undertaking that RIL group will only exercise limited rights in ETPL. Parties submitted that the said transfer would address the competition issues in Telugu GEC, Telugu Films, Kid’s and infotainment & lifestyle segment.

CCI’s assessment of VPM I: The CCI accepted the modifications offered by the parties noting that in view of VPM I, the proposed combination / merger is not likely to have any appreciable adverse effects on competition (“AAEC”) in the segments/sub-segments of the TV Channels Market.

3. Competition concerns in OTT Streaming Market

The CCI noted that Viacom 18, SIPL and RIL (through its subsidiaries and affiliates) are present in the market of “Retail supply of AV content through OTT streaming platforms in India”. Viacom18 is present through Jio Cinema, SIPL through Disney + Hotstar, and RIL through BookMyShow, MyJio, JioTV, AltBalaji and ETV Win. The CCI assessed the market shares of the parties using three metric – i) average weekly watch time (“AWWT”); ii) Advertising revenues; and iii) Advertising and subscription revenues. It noted that the combined market shares of the parties are high, but do not pose any competition concerns in streaming of non-sports content, due to presence of other competitors (MX Player, Netflix, Amazon prime, Sony LIV etc.) in the market. As regards, the competition concerns regarding streaming of sports content, CCI noted that the same stands addressed in view of commitments offered by the parties under VMP II.

4. Competition concerns in Advertising Airtime Market

The CCI assessed competition concerns in the market of “Supply of advertising airtime in India” and noted that in view of commitments offered by the parties in VPM II, the competition concerns that the JV / Resultant post – merger could potentially increase advertisement rates on their TV channels and OTT platforms, stands addressed.

5. Competition concerns in other horizontal overlaps

In addition to above mentioned horizontal overlaps, the CCI also assessed competition concerns in – (i) Market for AV licensing content in India; (ii) Market for production and supply of films for theatrical release and music licensing in India; (iii) Market for provision of fixed broadband internet services (“BIS”) in India; and (iv) Market for distribution of broadcast TV channels to viewers in India. The CCI in its assessment found no competition concerns in these markets as parties held insignificant market shares.

VERTICAL & COMPLEMENTARY OVERLAPS

The CCI also assessed the mentioned vertical and complementary overlaps for any competition concerns but concluded that in view of the modifications and commitments offered by the parties vide VPM I and VPM II, the proposed merger does not raise any competition concerns in the said overlaps.

  1. Vertical Overlap 1: Upstream market for licensing the AV content in India and downstream market for the provisions of AV content in India through (i) operation and wholesale supply of linear TV channels and (ii) retail supply of AV content through OTT streaming platforms.
  2. Vertical Overlap 2: Upstream market for the supply of advertisement space in India through (i) TV channels and (ii) OTT streaming platforms and downstream market for advertising in India.
  3. Vertical Overlap 3: Upstream market for operation and wholesale supply TV channels in India and downstream market for advertising in India.
  4. Complementary Linkage 1: Provision of internet access (both fixed BIS and wireless BIS) and online services, which require internet facilities to function such as OTT platforms.

CCI’s Decision of Approval

The approval of the CCI is not absolute and can be revoked anytime if the information provided by the parties are found to be incorrect. The CCI also noted that in case parties fail to comply with the commitments and modifications under VPM I and VPM II, then the said merger would deemed to have caused AAEC in India and the parties will be subjected to penalties under the relevant provisions of the Competition Act, 2002. Further, for the purposes of supervision of implementation and monitoring of the sale of divestment TV channels and other commitments, CCI has directed appointment of Nodal Officer (to be appointed by the parties), Monitoring Agency, and a Divestment Agency (in case sale of divestment TV channels fails to take place in first divestment period).