Reliance-Disney merger: Who will cable operators curse now?

New Delhi: The impending merger of the media businesses of Reliance Industries with the India business of The Walt Disney Co. (TWDC) will also have a significant impact on the dynamics of the distribution business, with the merged entity having more control over pipes that distribute content.

RIL Retained distributes TV channels to consumers through its subsidiaries Den, Hathway Digital, and GTPL Hathway, which operate as national MSOs and provide cable TV services.

TWDC Retained is present through Tata Play, which operates a DTH satellite distribution platform in India to distribute TV channels to viewers.

Along with the broadband and mobile internet services, the merged entity will have control over three top DPOs—Den, Hathway Cable and GTPL—as well as the largest DTH player, Tata Play.

It must be noted that TWDC is looking to sell its stake in Tata Play. TWDC still holds about 20-30% stake in the company.

As the merger sees two foreign companies—Viacom18 and Star India—become a part of the Indian conglomerate, it will be interesting to see who the cable operators will blame for their downturn.

The memories of cable operators, especially local cable operators, across the country, protesting against Star India’s alleged monopoly and holding the company responsible for their downturn are still afresh.

Along with Star India, the cable operators also appropriated four other top broadcasters –  Viacom18, Sony Pictures Networks India, Zee Entertainment and Discovery—as their enemies.

These five top broadcasters would form a part of the frequent complaints from cable operators to the Telecom Regulatory Authority of India (TRAI).

The narrative was so compelling that the then dispensation at the regulator also started using the term “those five broadcasters” in a manner that TRAI was fighting some battle with the broadcasters to protect LCOs.

The DPOs under Reliance Retained businesses virtually control the All India Digital Cable Federation (AIDCF). With this merger, AIDCF will be left to pick fights only against Zee, Sony and Discovery.

This essentially means the industry will miss the scenes, such as AIDCF refusing to implement NTO 3.0 right before the 2023 IPL despite agreeing to the then dispensation at the TRAI.

While AIDCF as an industry body claims to speak for all its members, many of them sensed the game plan and did not stand by its decision to not implement NTO 3.0. In the end, the fight visibly appeared between the Reliance-retained subsidiaries and Star India.

Industry observers saw this as one of the reasons forcing Disney to merge with Reliance. The television rights holder of IPL was already under pressure due to the exorbitant price to secure the broadcast rights.

Bearing the brunt of technological advancements and changing consumer behaviour, major DPOs lost about half of their subscribers in the last five years.

However, the combined subscription of Reliance Retained subsidiaries—Den, Hathway and GTPL—grew 19% during the same five-year period.

“The independent cable operators would either align themselves with big corporates on the lines of Den, Hathway and GTPL for their future or wait for the end game,” said a media veteran.

The coming together of the top three DPOs and Tata Play may appear to be a monopoly in distribution. However, the Competition Commission was convinced against any such notion.

In its detailed order clearing the merger, the CCI observed that the proposed combination is not likely to cause any competition concerns in this segment.

CCI observed that the combined market share of the parties is 20–25% and the incremental market share is around 10%.

“Other competitors include DD Freedish, Bharti Telemedia, Sun Direct TV, Dish TV, etc. Further, it is also submitted that the market is highly fragmented with the presence of numerous MSOs and LCOs; various pan-India DTH operators, IPTV operators, and one HITS operator. It is also submitted that the must-carry obligations ensure that DPOs provide consumers access to TV channels operated by various broadcasters without any discrimination (subject to other conditions in the TRAI regulations), while the relevant Cable Rules and various regulations on quality of service ensure that DPOs cannot unilaterally reduce the quality of service provided to consumers (in terms of technology to be used or other hardware services),” CCI said in its order on the basis of submissions by Reliance and Disney.