RIL and Disney, which are looking to complete the merger by October, have been looking for ways to allay regulator concerns over the possible impact of the merger on India’s media and entertainment (M&E) industry.
“The proposal being discussed internally is to grant a two-year price freeze on advertising rates for all advertisers and agencies,” one of the people said.
A second person added that “both sides are confident that the merger agreement will clear the ICC hurdle.” “The price freeze on advertising rates has the potential to allay ICC’s concerns about the merger’s impact on competition,” the source said.
Media agency officials believe the RIL-Disney proposal is interesting as it could help the Star-Viacom18 combination get ICC approval, and the potential loss of advertising revenue due to the freeze in advertising rates will be low.
However, some officials argue that the merged entity will face negligible losses from the proposed rate freeze, especially for properties like the Indian Premier League (IPL), which have been badly hit due to weak advertising over the past two years. “Both Star Sports and JioCinema would not mind keeping ad rates unchanged considering they have barely managed to fill ad inventory due to the exit of new-age advertisers and wariness among traditional brands to make big-ticket buys in cricket,” a media buyer said. Both RIL and Disney declined to comment.
Apart from the tariff freeze, other proposals made by RIL and Disney include closure of 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 investigating the proposed ₹70,000-crore merger of Viacom18 and Star India, citing potential antitrust concerns and questioning their dominant market shares in the television and streaming segments.
It is being examined 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, regardless of age, income or language. It commands the highest premium advertising rates, unmatched by any other genre.
One industry expert said the biggest advantage of the merger would be the bargaining power the combined entity would have over advertisers due to its vast market dominance.
In May, RIL and Disney filed an application with the CCI seeking clearance for the Star-Viacom merger18, arguing that it will not significantly affect competition in the M&E industry.
On the subscription side, RIL and Disney have argued that both on-demand and on-demand 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 the discounts offered by broadcasters on TV packages are regulated and uniform across all platforms, ensuring that broadcasters do not discriminate between the two service providers.
In February, RIL and Disney signed agreements to merge Star and Viacom18 to create a media giant with over 100 TV channels and two streaming platforms, Disney+ Hotstar and JioCinema. The merged entity is likely to retain only 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, who owns the remaining stake. The combined entity would have annual revenues of about Rs 25 billion.
Chairman of Reliance Foundation Nita Ambani will be the chairman of the merged entity and Shankar will act as vice chairman.
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