BENGALURU, India (Diya TV) — Walt Disney Co and Reliance Industries won approval on an $8.5 billion merger of Indian media assets despite regulatory concerns tied to their control of cricket broadcasting rights. The Competition Commission of India gave clearance for the deal, pending voluntary modifications by the companies.

The merger will make ZEE the largest entertainment company in India, possibly setting up a hot contest with other large players such as Sony, Netflix, and Amazon. This would consolidate a whopping 120 channels besides two digital streaming services into one big conglomerate.

The approval from the CCI came with some concessions aimed at trying to allay fears of monopolistic control over cricket broadcasting. The companies agreed to several concessions including a pledge to avoid unreasonable increases in advertising rates for streamed cricket matches and divest 7-8 non-sports TV channels among others, to mitigate any impact on the advertising market.

Cricket enjoys pride of place in Indian culture, with an estimated 1.4 billion followers in the country. Both Disney and Reliance have spent close to $9.5 billion over the past few years to buy rights for major cricket tournaments, including the IPL and events staged by the International Cricket Council.

The combined entity would also retain broadcast rights for other major sporting events such as Wimbledon, MotoGP, and the English Premier League, among others. This extensive portfolio would therefore place Reliance in a strong position within the $28-billion Indian media and entertainment industry and further advance the influence of Mukesh Ambani. This approval for the merger comes a day ahead of Ambani addressing the Annual General Meeting of Reliance.

This is because CCI had apprehensions that the merger would give the duo undue control over cricket broadcasting rights to the detriment of advertisers. Reliance and Disney convinced the CCI that it was committed to competitive subscription rates while promising to avoid bundling of advertising slots across different cricket tournaments.

The merged entity would take 40% of the Indian TV and online video advertising market, Jefferies said, adding that this was because of increasing investment in sport sponsorship and sports media. “Cricket events occupied 87% of nearly $2 billion spent on sports-related activities in India in 2023,” according to media agency Group M.

Reliance will retain a majority ownership of the combined entity to be headed by Nita Ambani, a connoisseur of the arts and ranks among the Bollywood elite. The deal is still pending the approval of a tribunal for Indian companies but is expected to be finalized in the next six months by analysts, including Elara Capital’s Karan Taurani.

Jefferies estimates the Disney-Reliance partnership to capture 40% of India’s TV and streaming advertising market. Companies spent about $2 billion on sports-related sponsorship, endorsement, and media in India in 2023, with cricket drawing 87% of that investment, per estimates from media agency GroupM. The merged entity would be majority-owned by Reliance and would be headed by Nita Ambani, a patron of the arts with close links to Bollywood. “If cleared, the deal would result in the emergence of a dominant player in broadcasting, thereby giving it a monopolistic hold on advertisement revenues from cricket,” said K.K. Sharma, former chief of mergers at the Competition Commission of India.