RIL and Disney, which are seeking to complete the merger by October, have been scouting for ways to assuage the regulator’s concerns about the potential impact of the merger on the Indian media and entertainment (M&E) industry.
“The proposal being discussed internally is to provide a two-year price freeze on ad rate cards to all advertisers and agencies,” one of the persons said.
A second person added that “both sides are confident that the merger deal will cross the CCI hurdle.” “Price freeze on ad rate cards has the potential to allay CCI’s concerns of the merger’s impact on competition,” the person said.
Media agency officials believe RIL and Disney’s proposal is interesting as it might help the Star-Viacom18 combine secure CCI approval, and that possible ad revenue loss due to the ad rate freeze will be low.
However, some officials argue that the merged entity will face negligible loss from the proposed rate freeze, especially for properties like the Indian Premier League (IPL), which have been badly impacted due to softness in advertising in the last two years.”Both Star Sports and JioCinema wouldn’t mind keeping the ad rates unchanged considering they have barely managed to fill the ad inventory due to the exit of new-age advertisers and wariness among traditional brands to make expensive buys on cricket,” a media buyer said.Both RIL and Disney declined to comment.
Apart from the rate freeze, other proposals being madec by RIL and Disney include shutting certain weaker channels in Hindi and regional markets as the combined entity’s market share in many markets would easily cross the 40% threshold.
The CCI is probing Viacom18 and Star India’s ₹70,000 crore merger proposal, citing potential antitrust issues and questioning their dominant market shares in TV and streaming segments.
It is examining whether the consolidation of key cricket rights with Star-Viacom18 will give an unassailable competitive advantage to the proposed merged entity.
Cricket is the most popular content genre in India, cutting across age, income, and language barriers. It commands the highest premium ad rates, unmatched by any other genre.
An industry expert said the biggest advantage of the merger would be the bargaining power that the combined entity would have on advertisers due to its sheer market dominance.
In May, RIL and Disney filed an application with the CCI seeking clearance for the Star-Viacom18 merger, claiming it won’t significantly impact competition in the M&E industry.
On the subscription side, RIL and Disney have argued that both the bouquet and a la carte rates are regulated by the Telecom Regulatory Authority of India (TRAI), as the merged entity will have to offer content to all TV distribution platforms at uniform rates.
Even discounts given by broadcasters on TV bouquets are regulated and uniform across platforms, ensuring that broadcasters do not discriminate between the two service providers.
In February, RIL and Disney signed deals to merge Star and Viacom18 to create a media behemoth with more than 100 TV channels and two streaming platforms, Disney+ Hotstar and JioCinema. The merged entity is likely to retain just one streaming platform, JioCinema.
RIL will control the JV with a 56% stake, followed by Disney with a 37% stake, and Bodhi Tree Systems, an entity promoted by Uday Shankar and James Murdoch, holding the remaining stake. The combined entity would have annual revenue of about ₹25,000 crore.
Reliance Foundation chairperson Nita Ambani will be the chairperson of the merged entity with Shankar serving as vice-chairperson.
