By Aditya Kalra and Nandan Mandayam

BENGALURU (Reuters)

Walt Disney Co and Reliance Industries have received approval for an $8.5 billion merger of their Indian media assets after addressing regulatory concerns regarding their control over cricket broadcasting rights.

The Competition Commission of India (CCI) announced the deal’s approval, contingent upon modifications voluntarily submitted by the companies, with further details to be released soon. This was considered the most significant hurdle to the merger.

To facilitate the merger, the two companies offered several concessions, including commitments to not excessively raise advertising rates for streamed cricket matches and to sell off 7-8 non-sports TV channels.

This merger will create India’s largest entertainment entity, designed to compete with major players like Sony, Netflix, and Amazon by combining 120 TV channels and two streaming services. It will also provide Reliance owner Mukesh Ambani, Asia’s richest person, with a more substantial presence in the $28 billion media and entertainment sector. Regulatory approval comes just before Ambani’s address to Reliance shareholders at the Annual General Meeting.

During the review, the CCI questioned Reliance and Disney extensively about the merger, expressing concerns that the new entity would dominate cricket rights for both TV and streaming services, potentially disadvantaging advertisers in a cricket-obsessed nation of 1.4 billion.

Reliance and Disney have invested approximately $9.5 billion in recent years for the rights to the Indian Premier League and other major cricket events, including World Cups organized by the International Cricket Council and the Indian cricket board.

In their commitment to the merger, the companies have also promised not to bundle and sell advertising slots across multiple cricket tournaments and to maintain subscription prices within regulated limits.

Neither Reliance nor Disney responded immediately to requests for comments regarding the approval. Both companies have aimed to boost their streaming platforms by offering free access to cricket matches, encouraging users to eventually subscribe.

Karan Taurani, an analyst at Elara Capital in India, predicts the deal will finalize in six months pending approval from an Indian corporate tribunal, which is expected to be granted.

The merged entity will also control Indian broadcast rights for notable events such as Wimbledon, MotoGP, and the English Premier League.

Jefferies estimates that the Disney-Reliance combined entity will secure a 40% share of the Indian advertising market in TV and streaming. In 2023, companies spent nearly $2 billion on sports-related sponsorship, endorsements, and media in India, with cricket accounting for 87% of that expenditure.

Reliance will be the majority owner of the merged company, with Nita Ambani, Ambani’s wife, serving as chairperson, tapping into her experiences in the arts and connections with Bollywood.

K.K. Sharma, a former head of mergers at the CCI, noted that if approved, this deal would create a dominant player in the broadcasting market that could essentially monopolize cricket advertisement revenues.