Disney and Reliance Industries are working on merging Disney’s HotStar with Reliance’s Viacom18 to create a larger entity to compete with bigger streamers. They are not being warned of potential antitrust issues with sports, as they are seeing with their state-side Venu Sports venture. This time, the issue is over cricket.
The Competition Commission of India (CCI) has sent notice to the companies that the merger could cause issues with cricket broadcasting rights, mainly regarding advertising.
Such a merger will give the two entities 40% of the broadcast share, allowing them to potentially gouge advertisers for ad spots during televised cricket matches.
This puts the companies in a position where they must make some changes if they want the $8.5 billion deal to go through by October.
Reuters talked to seven antitrust attorneys who said they will “now have to come up with structural changes to their arrangement or so-called behavioural remedies, or both, which can include selling some of their broadcast rights. The term refers to changes in how a merged entity would conduct its business.”
Rahul Rai, a partner at Axiom5 law firm, also presented another solution: The companies agree to cap the advertising rates for a few years so the advertisers do not feel gouged.
“What they can offer is that the rates will be fair, reasonable and non-discriminatory, or that they will not increase the rate beyond a certain percentage which accounts only for inflation.”
Both Disney and Reliance have spent a great deal of money to obtain broadcasting rights for the Indian Premier League.
Hopefully, they can reach an agreement to stay on track, but Disney was banking on cricket.
This is the second antitrust case against the Walt Disney Company in the past few months, with Fubo TV also filing complaints against them over the upcoming Venu Sports joint venture with Warner Bros. Discover and Fox. That case has led to a temporary injunction against Venu Sports.
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Source: Reuters
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