RIL and Walt Disney mull two-year ad rate freeze to gain CCI’s merger approval

Mumbai: Reliance Industries (RIL) and Walt Disney are considering proposing a two-year freeze on advertising rates to the Competition Commission of India (CCI) to gain approval for their Star India and Viacom18 merger, according to media reports.

RIL and Disney aim to finalise the merger by October and are exploring measures to address regulatory concerns about its impact on the Indian media and entertainment industry. The proposed rate freeze is intended to mitigate competition worries.

Officials from media agencies view the proposal as promising, suggesting it might help secure CCI approval with minimal revenue loss, particularly since ad rates are already low for properties like the Indian Premier League (IPL). 

Some argue the merger will face minimal impact from the rate freeze due to reduced ad inventory and cautious spending on cricket.

Besides the rate freeze, RIL and Disney are also considering shutting down weaker channels in Hindi and regional markets, given the merged entity’s likely market dominance.

The CCI is reviewing the Rs 70,000 crore merger for potential antitrust issues, particularly regarding cricket rights and market share. 

Cricket, a major revenue driver due to high ad rates, raises concerns about the merger’s competitive impact.

In May, RIL and Disney applied to the CCI for merger clearance, claiming it will not significantly affect competition. They argue that subscription rates are regulated by the Telecom Regulatory Authority of India (TRAI), ensuring uniformity across platforms.

The merger, announced in February, will combine over 100 TV channels and the streaming platforms Disney+ Hotstar and JioCinema. 

The merged entity is expected to keep JioCinema and will have an annual revenue of about Rs 25,000 crore, with Reliance holding a 56% stake, Disney 37%, and Bodhi Tree Systems the remainder. Nita Ambani will chair the new entity, with Uday Shankar as vice-chairperson.