Disney-Reliance merger to raise subscription tariffs; negatively impact other telcos

“The honeymoon period of Indian Subscriber will gradually come to an end. Subscriber rates both in digital and linear TV may go up,” Nuvama Institutional Equities Executive Director (Research) Abneesh Roy said.

According to Roy, this merger of the Viacom18 and Disney Star business "will also be negative for other telecom players as Jio will have a much more superior access to content, potentially also slightly negative for advertisers as bargaining power of the merged entity will be higher."

The proposed merger, which is expected to receive approvals by the first quarter of 2025, also has to pass through the scrutiny of the fair trade regulator Competition Commission of India (CCI).

Elara Capital Senior Vice-President, Karan Taurani said, "Since the merged entity will be the biggest player in the Indian TV industry, the merger will require CCI approval which may take some time or lead to shut down of channels in case of a big overlap, more within the general entertainment channels (GECs) genre.”

"The consolidation between RIL and Disney on the India TV side could have a negative impact on other linear TV broadcasters, such as Sun TV, Zee, Sony, and others, as they may not be able to scale up on market share," Taurani said.

Roy seconded, "Some channels would need to be divested/shut in our view, just like in ZEE-Sony where some tail channels had to be sold off/shut."

Earlier, when Sony Group was in talks with the merger of its Indian media entity with Zee Entertainment, then CCI had granted conditional approval. It suggested divesting three GECs by them.

The merger will create a Rs 70,000 crore behemoth, which will have over 70 channels from Star India and 38 TV channels from Viacom 18 in eight languages, along with two large OTT platforms - Jio Cinema and Hotstar, and two film studios owned by each of them.

On top of it, the bargaining power of advertisers will also be negatively impacted, according to sectoral experts.

Taurani said the “monopoly in sports properties may lead to higher ad revenues” of the merged entity.

Disney and Jio collectively control approximately 75-80% of the Indian sports market across both linear TV and digital platforms, he added.

“This dominance in sports, primarily cricket, positions them to command a substantial share of the overall ad market, showcasing strong growth in an industry where sports is a key driver of viewership on both linear TV and digital platforms,” Taurani said.

In CY22, sports adex (advertising expenditure) in India stood at Rs 7,100 crore jointly for TV and digital, in which Disney India had a contribution of 80%.

The combined entity will have lucrative sports properties like the Indian Premier League (both TV and digital), ICC cricket tournaments (both TV and digital), Wimbledon, Pro Kabaddi League, BCCI domestic cricket etc.

The merged entity is expected to command a digital OTT market share of 34%, while the TV viewership share in top 10 channels (according to BARC) is 40% as of CY23, said Taurani.

According to NV CAPITAL Managing Partner Vivek Menon, the entity has the most coveted sporting spectacle like the IPL and the World Cup under its belt.

"This juggernaut will be a force to reckon with when it comes to all the spheres of the media & entertainment and sports ecosystem namely advertising, subscription, OTT, sports & content acquisition," he said.

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