Cricket likely to play spoilsport in Walt Disney-Reliance merger

Will the creation of India's largest media firm help fight the tech-media majors or simply birth a new monopoly?

Disney-Star has the digital and TV rights to all men’s and women’s events played under the International Cricket Council (ICC) from 2024-2027. It also owns the broadcasting rights to the Indian Premier League (IPL) from 2023-2028. It paid close to $6 billion (Rs 49,200 crore) for both.

The Reliance Industries and Bodhi Tree Systems owned Viacom18 owns the streaming rights to the IPL. It paid close to Rs 24,000 crore or just under $3 billion for these. Add it all up. That is $9 billion (Rs 73,800 crore) for a sport that reaches anywhere between 500-600 million Indians on both television and online.

Does the merging of the companies that own these rights create a monopoly?

“India’s antitrust body has reached an initial assessment that the $8.5 billion India merger of Reliance and Walt Disney media assets harms competition due to their power over cricket broadcast rights,” said a Reuters report earlier this week. To keep the deal going, “They may have to make further concessions,” says Daoud Jackson, senior analyst, media and entertainment, Omdia.

 

This may mean letting go of channels in languages, of giving up some rights, or even accepting ad rate caps on cricket events, pushing down the duo’s ability to make money.

“The rights' advantage will last only for 2-3 years. This seems like a weak argument,” says one industry insider.

Another person close to the firm points out that it is mandatory for private broadcasters to share sports feed with Doordarshan.

And Doordarshan is available in every one of India’s 176 million TV homes by law. How then does owning cricket rights constitute a monopoly? Jackson reckons it does.

“If you want a demonstration of why the CCI is right, look at the streaming for the ODI World Cup last year. Disney + Hotstar took a premium property that would have been a major subscription driver and offered it for free because of the expectations of consumers in a competitive market,” Jackson says.

“Disney and Reliance will say that these rights are temporary. But in future rights windows, few competitors will have the scale to secure rights and even fewer the capital to push values up. The lower these rights, the less money in the broader cricket ecosystem. In France the lack of competition has driven down the value of sports rights,” he adds.

Many dismiss CCI’s questions as ‘due process.’

The Viacom18-Star India merger, announced in February this year, will create a broadcaster with 110 channels such as Star Plus and Colors and a leading 32 per cent share of all television viewership. That is a hold over 285 million (of about 890 million TV viewers) with large slices in Hindi, Marathi, Telugu and Bengali speaking markets.

The Rs 23,000 crore entity created will be India’s largest media firm.

Where are the eyeballs?

That, says the industry insider, is the wrong way to view it. Video – read that as television, streaming, films – is by far the largest part of the media and entertainment business globally.

Over the past decade, it has been redefined by Google and Meta with billions of user-generated, sometimes professionally created video. Google, with revenues of $278 billion in the financial year ending September 2023, uses search and YouTube, the world’s largest streaming app, to attract audiences.

The $127 billion Meta uses socialising to keep them coming to its WhatsApp, Facebook or Instagram. These firms offer advertising across genres and geographies at one-fourth the price of broadcast walking away with 70-80 per cent of all digital advertising.

Even if audiences move online to the same broadcaster (from Star Plus to Hotstar) they are now part of an ecosystem where the rules have been set by tech-media with its adtech machines, low rates and humongous reach.

The battle for broadcasters, indeed for all media firms is, “How do you redefine the advertising pie? No one yet in India has been able to use TV viewership and reach, combined with online video to reframe the conversation and currency for monetisation with advertisers,” said Vivek Couto, executive director and co-founder, MPA earlier this year.

“In the long term what matters is where the eyeballs are,” says the insider.

YouTube, India’s largest video streaming service with 462 million unique visitors, reaches 88 per cent of people watching video online. Across its three brands, Facebook, Instagram and WhatsApp, Meta reaches 87 per cent. If you remove duplication, “the merged Voot/JioCinema/Hotstar/Jio TV would have 184 million unique visitors (June 2024),” says Atul Nandoskar, sales director, Comscore India.

Though online and linear numbers cannot strictly be added, for the sake of argument let us say Disney plus Viacom18 reaches 300 million across the two formats. That is two-third of the reach of YouTube in India.

Now add RIL’s stakes in an array of distribution firms in cable (Hathway, GTPL) and telecom (Jio) giving it access to millions of more consumers and a $1.4 billion infusion of cash. The duo perhaps could fuse the profitable TV business to the unprofitable digital one to sell a combined audience to advertisers.

“The larger picture has to be about breaking the hegemony of Google and Meta. All anti-trust bodies across the world are worried about them,” says the insider pointing to a judgment in a US court recently that branded Google a monopoly in search.

One analyst says that he hasn’t seen this level of consolidation in any other media merger. In the process of breaking the Google-Meta duopoly in India, could Reliance-Disney end up creating a new one?