Here’s how Reliance-Disney secured CCI approval on merger; check full details

New Delhi: The Competition Commission of India (CCI) on Tuesday released a comprehensive 48-page order detailing the approval for the high-profile media merger between Reliance Industries and Walt Disney. 

A major stipulation is the divestment of seven TV channels, including Star Jalsha Movies, Colors Marathi, and Hungama, spanning different language and genre categories. 

In addition, Reliance and Disney have committed to not bundling ad slot sales across TV and OTT platforms for their three major cricket broadcasting rights—IPL, ICC, and BCCI—ensuring that these rights will be marketed separately for the remainder of their contracts.

As part of its commitment to the Competition Commission of India (CCI), RIL has agreed to limit its influence over Eenadu Television Private Limited's (ETPL) operations.

Details of the divestment: 

The order entails the divestment of seven TV channels:

1. ‘Star Jalsha’ Movies and ‘Star Jalsha’ Movies HD, operated by Star India, in the Bengali Film Channel Sub-Segment

2. Colors Marathi and Colors Marathi HD, operated by Viacoml8, in the Marathi GEC Sub-Segment

3. Colors Super, operated by Viacoml8, in the Kannada GEC Sub-Segment

4. Hungama and Super Hungama, operated by SIPL, in the Kids’ Channel Segment

CCI has mandated that Reliance and Disney must divest within a set timeline, ensuring that the new buyer is independent, financially capable, and free from competition concerns. It has specifically highlighted that Zee, Sony and Sun TV cannot acquire the channels that Disney and Reliance put on divestment. 

The divested TV channels will include licenses for trademarks, channel names, and logos. It will also encompass applicable licenses, permits, and authorisations, as well as relevant agreements concerning content licensing from the appropriate licensors. Additionally, all employees who are exclusively dedicated to and working for the Divestment TV Channels will be included in the divestment.

CCI in its order wrote that the parties (Disney and Reliance) and the JV will not reacquire any stake or influence in the Divestment TV Channels for five years after the sale.

“This includes acquiring shares, altering charter documents, or gaining control through board appointments,” it stated.

As per the order, Reliance and Disney must complete the divestment within the first divestiture period, starting from the date of the order, with a possible extension if needed, subject to the Commission’s approval.

It added, “If the sale is not finalised within this period, the second divestiture period will begin, lasting up to the specified time or longer if extended by the Commission, with the process managed by a divestiture agency.”

The purchaser of the Divestment TV Channels must meet the following criteria: 

• Not be Zee Entertainment or Culver Max Entertainment (i.e., Sony) or Sun TV Network (including their respective affiliates) in the Marathi GEC Sub-Segment, Kannada GEC Sub-Segment, Kids’ Channel Segment, Bengali Film Channel Sub-Segment

• Be independent with no connections to RIL, TWDC, the JV, or their affiliates

• Not be a current or recent (within 3 years) employee or director, nor their spouse or child; have the financial resources, expertise, and motivation to sustain the channels as a competitor to the JV.

• Not raise competition concerns or cause delays while being able to secure necessary regulatory approvals

CCI added that if the approved purchaser(s) is not an existing TV channel broadcaster and hence does not have the customary and necessary infrastructure to run the Divestment TV Channels, then during the agreed transition period, Reliance and Disney shall offer all services that are customary and necessary for the operation of the Divestment TV Channels.

Within 15 working days of receiving the CCI Order, Reliance and Disney will appoint a Nodal Officer to oversee the sale of the divested TV channels and keep the Commission informed until a Monitoring Agency is appointed. The parties must submit quarterly reports on the sale's progress to the CCI. If the sale is not completed in the First Divestiture Period, the CCI may appoint a Divestiture Agency to manage the process. The Divestiture Agency will have full authority to complete the sale at no minimum price, with the terms subject to CCI approval. Both agencies will cooperate to ensure the divestment proceeds smoothly.

Reliance and Disney not to bundle sports ad slot sales for TV and OTT

The companies have agreed not to bundle ad slot sales for TV and OTT platforms across the three major cricketing rights they hold—IPL, ICC, and BCCI—for the remainder of their contracts. They also committed to keeping ad rates for IPL and ICC events at reasonable levels and ensuring fair terms for advertisers on their streaming platforms.

This measure is intended to ensure that advertisers have fair access to individual cricketing events, preventing any monopolistic practices that could arise from bundling these high-value properties.

The parties will broadcast key cricketing events on TV and OTT via ad-based, subscription, or hybrid models, with subscription fees aligned with industry standards.

Similarly, the parties have committed not to bundle OTT ad slot sales for these cricketing rights. In practice, this means that advertisers will have the option to purchase ad slots for IPL, ICC, and BCCI events separately on OTT platforms, rather than being compelled to buy a bundled package that could drive up costs.

In addition to these commitments, the parties have taken steps to further enhance transparency in their advertising practices. They will not bundle ad slot sales for IPL across both TV and OTT platforms, meaning that advertisers looking to promote their brands during IPL matches will have the flexibility to choose between TV and OTT, without being forced into a joint package.

One of the significant undertakings provided by Reliance and Disney is their commitment to comply fully with the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act of 2007. This legislation requires that certain sports events of national importance, such as cricket, be shared with Prasar Bharati, to ensure broader public access to these events. The parties have affirmed that they will implement this requirement in both letter and spirit.

The parties have also pledged to supply advertisement space on their streaming platforms on fair, transparent, and non-discriminatory terms until the expiration of the current rights. 

To safeguard advertisers’ interests, the companies have assured the CCI that they will not unreasonably increase advertisement rates for ICC and IPL events on either their TV or OTT platforms for the duration of their current contracts.

Additionally, the major cricket events for which they currently hold rights, including IPL and ICC tournaments, will be broadcast on their linear TV channels and streaming platforms. These broadcasts will follow either an advertisement-based model, a subscription model, or a hybrid model. In case of a subscription or hybrid model, the companies have committed to charging viewers subscription fees that are consistent with industry standards. For TV broadcasts, they will comply with the subscription rates set by the Telecom Regulatory Authority of India (TRAI), and for OTT streaming, the subscription rates will not be the highest in the industry, ensuring competitive pricing.

The CCI has stipulated that Reliance and Disney, as well as their joint ventures, must submit compliance reports periodically following the order. These reports, provided through a designated Nodal Officer, will keep the Commission informed about the progress of the commitments. Furthermore, if any unforeseen challenges or difficulties arise in implementing these commitments, the CCI reserves the right to issue additional directives.

RIL divests controlling rights in ETPL to ensure independent operation

Reliance Industries, through its subsidiary TV18, holds a 24.5% stake in Eenadu Television Private Limited (ETPL).

RIL has agreed to limit its influence over ETPL's operations. The RIL Entities, which include TV18 and Siddhant Commercials Private Limited, will only exercise specific rights under the ETPL Shareholders’ Agreement, such as the right to receive quarterly unaudited financial statements.

To facilitate this process, TV18 will irrevocably assign its voting rights on the 24.5% stake to ETPL's current promoters, allowing them to exercise these rights without RIL's influence. This means RIL will not have control or participative rights, nor any representation on ETPL’s board. Following the assignment, RIL will ensure that any transfer of its shares to affiliated parties will not alter this commitment.

Ushodaya Enterprises, the largest shareholder in ETPL, holds a 50.94% stake. The assignment of voting rights will solidify the independence of ETPL, enabling it to operate without interference from RIL. RIL is required to complete this renouncement of rights within a specified timeframe and report the progress to the CCI every three months until the commitment is fully implemented. A Nodal Officer has been appointed to oversee this process and ensure compliance with the CCI's order.