The fate of the USD 8.5 billion merger between Viacom18 (owned by Reliance Industries) and Star (owned by Walt Disney) will be decided today by the National Company Law Tribunal.
It has been speculated by experts that if the merger goes through, it will create a major media conglomerate which will dominate sports broadcasting and hence also drive up the ad rates for major sporting events.
Disney and Jio collectively control approximately 75-80% of the Indian sports market across both linear TV and digital platforms. The speculation from experts is that this merger will give the merged company control over broadcasting major cricket events like the ICC World Cup, ICC T20 World Cup and the IPL as well as other significant tournaments such as the Olympics and major international football leagues.
As per Elara Capital, using statistics from FY23, the merged company will control about 42% of the total TV market share, roughly 40% of TV advertising and roughly 34% of the digital OTT market share. Looking at the General Entertainment Channel (GEC) segment, Viacom18 owns 38 TV channels in eight languages, including Viacom18 Studios and their OTT platform Jio Cinema. Disney Star brings more to the table with over 70 TV channels in eight languages, their streaming platforms Disney+ and Hotstar, as well as the Star Studios. Hence, given the fragmentation across multiple channels, this is expected to create overlap in terms of content, resulting in some channels shutting down and consolidation of resources.
Additionally, the GEC sector will hence be challenging even post-merger as viewership is driven by content quality, which is inequitably distributed across shows. Hence, a monopoly in this sector is not expected to happen.
Furthermore, even though the merged company will have a large broadcasting share and numbers on paper, media analysts think that this might not directly translate to advertisers pouring in money on more expensive ad slots since they focus on return on investment (ROI) and the audience reach. Hence, while some change in the negotiation power is expected, especially in sports content, the effect on GEC is expected to be less pronounced.