The National Company Law Tribunal (NCLT) will decide today on the $8.5 billion merger between Walt Disney's Star India and Reliance Industries' Viacom18. If approved, the merger will create a major media conglomerate with a dominant position in sports broadcasting, as the combined entity will control key sports leagues.
However, experts believe that in the General Entertainment Channel (GEC) segment, content will continue to be the key differentiator, and the merged entity may not achieve a monopoly in this market.
According to Elara Capital's assessment, the merged company will control 40% of TV advertising and 42% of the total TV market share (as of FY23). Meanwhile, the united company is predicted to command a digital OTT market share of 34% in 2023. Currently, Disney Star owns over 70 TV channels in eight languages, a streaming platform Disney+ Hotstar, and a film studio, whereas Reliance owned broadcast division- Viacom18 owns 38 TV channels in eight languages, a digital streaming platform Jio Cinema, and Viacom18 Studios.
While the Star India and Viacom18 merger is expected to result in a larger number of channels, experts believe that the combined entity may need to shut down some existing channels. They note that the merger will strengthen Viacom18-Star’s position in sports and live-action content, but the company will face challenges in the fragmented entertainment market.
Domination in sports
As earlier reported by exchange4media, the merged entity is set to become monopolistic, with Disney and Jio collectively controlling approximately 75-80% of the Indian sports market across both linear TV and digital platforms. This dominance in sports, primarily cricket, positions them to command a substantial share of the overall ad market, showcasing strong growth in an industry where sports is a key driver of viewership on both linear TV and digital platforms.
“This consolidation will give them a dominant position in the sports broadcasting market,” said a senior media planner on the condition of anonymity. He added that with this merger, Viacom18-Star will consolidate a vast array of sports properties, including major cricket events like the IPL, ICC World Cup, ICC T20 World Cup, and other significant tournaments and leagues, such as the Olympics and various football leagues.
Another senior industry observer shared that if the merger proceeds, it would create a significantly larger player in the media landscape, combining major properties from both Disney and Reliance. “This consolidation could lead to a stronger negotiating position, especially for high-value properties like cricket. With such a dominant presence, they might exert more influence over ad rates, potentially setting higher premiums due to their extensive portfolio and exclusive content.”
Content is king
Although the merger appears strategically advantageous, there will be overlaps between the two networks in certain markets and genres, which may lead to the discontinuation of some channels or properties. Additionally, the merger will require approval from the Competition Commission of India (CCI).
This also indicates that in the entertainment space who has the best content will command higher ad rates. In the entertainment sector, particularly among General Entertainment Channels (GECs), the market remains fragmented. "While shows like Anupama lead in ratings, no single program overwhelmingly dominates. This fragmentation means that, despite their extensive portfolio, Viacom18-Star will continue to face competition from other broadcasters in the entertainment space," noted a senior media executive.
He further explained that Star channels typically command higher ad rates in the GEC segment as they frequently dominate the TV ratings with a majority of the top programs.
Another expert explained that it is important to note that the impact on media planning and buying could be nuanced. For one, while a larger entity might command higher rates for marquee properties, such as cricket, the broader entertainment landscape is less consolidated.
“Programs on networks like Star Plus or Viacom18 might not have the same universal appeal or viewer consolidation as a major sports event. The changing habits of media consumption mean that no single program, apart from high-profile sports events, dominates to the extent that it justifies drastically higher rates,” he added.
Advertisers focus on ROI
According to media analysts, advertisers' willingness to pay is driven by the return on investment (ROI) and audience reach, rather than the size of the broadcaster alone.
“Even with a larger market share, a broadcaster’s ability to charge premium rates will still depend on the perceived value of their content and the ROI for advertisers,” said a senior media executive. He added, “The market's dynamics ensure that rates are adjusted according to audience delivery and not solely on the market power of the broadcaster.”
“While the merger could lead to some shifts in negotiation dynamics and premium pricing for exclusive content like cricket, the broader impact on general entertainment content might be less pronounced. Advertisers will continue to base their decisions on content value and audience engagement, rather than merely the size of the broadcaster,” said the planner.
As earlier reported by e4m, the transaction values the JV at ?70,352 crore ($ 8.5 billion) on a post-money basis, excluding synergies. Post completion of the above steps, the JV will be controlled by RIL and owned 16.34% by RIL, 46.82% by Viacom18 and 36.84% by Disney. Disney may also contribute certain additional media assets to the JV, subject to regulatory and third-party approvals.
