Critical analysis of Reliance and Disney India merger: a winning strategy of Reliance to monopoly streaming Rights of IPL
Summary: The merger between Reliance and Disney India has established Reliance as a dominant player in the Indian Over-The-Top (OTT) market, controlling 63% of the sector and displacing Disney from its leading position. Disney’s legacy in India began in 2004, initially thriving in broadcasting but facing challenges after 2021 as Reliance entered the OTT space. Disney had previously bolstered its market presence by acquiring 21st Century Fox and the Star Group, which provided access to a vast viewer base and the lucrative IPL broadcasting rights. However, the decline began in 2022 when Reliance outbid Disney for IPL streaming rights, leading to a significant loss in viewership for Disney, which continued to operate under a subscription model.
Introduction: In response to its dwindling market share, Disney has pursued a joint venture with Reliance, now under investigation by the Competition Commission of India (CCI) for its potential anti-competitive implications. Concerns are raised about how this merger could create barriers for new entrants and lead to monopolistic practices, limiting consumer choices in the market. If approved, the merger could allow Reliance to control over 120 channels, intensifying its dominance in the entertainment industry. The CCI’s investigation underscores the need to assess the merger’s impact on competition and consumer access, amidst a rapidly evolving media landscape where Reliance aims to further entrench its position through strategic alliances and acquisitions.
Reliance merger with Disney India has made reliance a media giant controlling 63% of the Indian OTT market and dethroned Disney which was the industry leader in broadcast channels. The legacy of Disney India was started in 2004 and made a huge profit out of broadcasting channels in India but the downfall was started in year 2021 when Reliance chairperson Mukesh Ambani has made a strategic plan to enter the OTT industry.
History:
The history dates back to 2004 when Walt Disney independently started its operations in India in the name of Disney’s India which was a subsidiary of Walt Disney. After the success of the Disney India, the company in the year 2012 made a plan to acquire Hungama TV which was owned by UTV to enter into Film Making Industry. Despite being successful in the broadcasting industry, the company incurred losses in Film making Industry. Eventually the company stopped its Production to film Making Industry in the year 2016. Furthermore, the legacy of Disney began to rise when in the year 2017, the company acquired 21st Century Fox under an estimation of $71 Billion Dollars which made Disney “a Global entertainment Giant”.
With this deal Disney took over the business operations of 21st century Fox in India as well. For the better context, In India Disney had established its broadcasting channels and become a giant by acquiring “Star Group” which was a subsidiary of 21st Century Fox. In our country the star group has owned 77 channels whereas Viacom18 has owned 38 channels[1]. With the acquisition of broadcasting rights of the star group, Disney has made a strategic comeback and has got access to 700 million people which also made Disney a huge competitor in media industry. The reason behind this huge success is because with just one move this acquisition has given Disney a favourable market presence where most of the Indian viewers has subscribed for its sports channels in which broadcasting of IPL played major role and TV serials. In 2017, Star group had broadcasting rights for IPL with 5 years agreement and with the acquisition, Disney has gained huge increase in viewers which also increased TRP.
Analysis:
As per the reports, IPL became second largest sport due to increase in the viewers to 7.2 million. For better understanding, Disney+Hotstar gain revenues with two of their strategies
whereas other OTT platforms uses a single strategy which is Pay and watch. During pandemic, to gain the better position in the OTT field, Disney merged with hotstar which holds most of the major Hollywood studio’s movies and series for example- this included Marvel studios and DC movies and one of the best all-time Favourite for Indian OTT users is “Game Of Thrones” where the rights to broadcast were bought from HBO by an agreement. Disney has become Godfather of the media Industry by merging with the companies which had fewer control over the market.
The downfall of Disney’s India has started in the year 2022 where the streaming rights of IPL has ended and this is where Mr. Mukesh Ambani stepped in and outbid the streaming rights of IPL. However, the actual rivalry started when Disney has also retained the IPL Rights. In order to increase its market viewers, Jio has made IPL 2023 free to watch ie. Without subscription whereas Disney still has its IPL under Subscription model. With this one legendary move, Disney’s India viewership has started declining and the market presence of Jio started increasing. In the year 2023, Disney has also lost one of its golden ticket where Ambani has brought the streaming rights of HBO, it includes Game of Thrones, House of dragons etc. which garnered large fanbase in India.
Now in order to regain its position in the market, Disney has entered into joint venture with Reliance industries. This is when Competition Commission of India has investigated into the merger and concerned about the negative competition impact on the market. As of now, the CCI has ordered the companies to hold a board meeting and discuss about its impact on the market. The planned merger is still in process of getting approval from the watchdog[2].
Conclusion:
Authorities will investigate into the merger to see if such combinations may have a negative impact or not. Sometimes the merger will create a barrier for the new competitors to enter the market which can be avoided by CCI. Additionally, the new entity may engage in anti-competitive practices, such as predatory pricing or exclusive agreements, which could harm competitors and reduce consumer choice. The analysis has clearly shown that Reliance has accepted to merge with Disney in order to become a giant in the entertainment industry. If the merger gets approved then reliance entertainment industry will have rights to broadcast 120+ channels.
In the current scenario, Competition Commission of India (CCI) is in the process of investigating the Disney – reliance merger which may impact the consumer choices and also it may become monopoly in broadcasting IPL since star group has already merged with reliance fully owned subsidiary Viacom 18[3].
Notes:-
[1] Reliance-Disney Merger: Here’s How the Deal Can Fundamentally Transform India’s Media and Entertainment Landscape, Business Today (Mar. 8, 2024), https://www.businesstoday.in/magazine/the-buzz/story/reliance-disney-merger-heres-how-the-deal-can-fundamentally-transform-indias-media-and-entertainment-landscape-420683-2024-03-08.
[2] Brandwagon: All About Disney-Reliance Merger—A Timeline of the $8.5 Billion Entertainment Power Merger, The Financial Express (Sept. 24, 2024, 10:20 AM), https://www.financialexpress.com/business/brandwagon-all-about-disney-reliance-merger-a-timeline-of-the-8-5-billion-entertainment-power-merger-3596903/.
[3] Reliance-Star India merger: CCI warns Disney, Reliance Media merger will hurt rivals, sources say (2024) The Economic Times. Available at: https://economictimes.indiatimes.com/industry/media/entertainment/media/reliance-star-india-merger-cci-warns-disney-reliance-media-merger-will-hurt-rivals-sources-say/articleshow/112651502.cms?from=mdr (Accessed: 27 August 2024).
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