Viacom-Hotstar merger: Brace for a monopoly in sports media rights bids

The mega merger between Viacom 18 and Disney Hotstar in India, announced earlier this week, is as big as it gets. The joint venture, valued at US $8.5 billion (Rs 70,352 crore) will create the biggest entertainment behemoth in India, but what does it really mean for the future of those gigantic bids for media rights of cricket properties like IPL (Indian Premier League), ICC (International Cricket Council) events, and sport in general?

Not without reason is India's advertising industry a little anxious that the merged identity will have a near monopoly over sports properties as it will collectively control 75-80 per cent of the Indian sports market, in both linear TV and digital platforms. This in turn, they feel, might reduce the bargaining power for the country’s media buying agencies.

Once the due diligence is done and the merger is completed by the first quarter of 2025, the joint venture will boast 70 channels from Star India and 38 TV channels from Viacom 18 in eight languages, along with two large OTT platforms, Jio Cinema and Hotstar.

An entity which the other players will find impossible to match, given the deep pockets of Reliance Industries Ltd (RIL) and properties like IPL (both TV and digital), ICC cricket tournaments (TV and digital), BCCI domestic cricket, Wimbledon, and the Pro Kabaddi League under the new entity's collective control.

If one looks back at the e-auction of IPL rights for the five-year cycle from 2023-27, BCCI (Board of Control for Cricket in India) saw an exponential rise in its earnings after splitting the auction into four packages, pitching the digital rights almost at par with TV rights and raking in a cumulative $6.2 million (nearly Rs 52 crore).

While Viacom 18 took a major share of the spoils with digital rights as well as a slice of telecast rights, Disney Star pledged almost the same amount, and Times Network settled for a smaller pie of TV rights in the US region.

While the presence of both Viacom 18 and Disney Star as competitors made for a level-playing field in an overheated market in the recent past, it will now be a single entity vying for both digital and TV rights to all marquee sporting content, with practically no rivals — the failure of the much anticipated Zee TV-Sony merger having cleared the decks.

It’s not exactly a secret the the falling through of the Zee-Sony deal has clearly left Disney Star on the backfoot as the latter had forged an alliance with Zee to successfully bid for the new media rights cycle of the ICC worth $1.5 billion (Rs 11,250 crore) from 2024-28.

Unconfirmed media reports say Zee failed to furnish the bank guarantee to Disney Star to close the ICC deal, which effectively means Disney will have to go it alone to honour the tie-up with ICC.

This is where RIL has offered a lifeline to Disney Star, and found itself in a win-win situation, both in terms of acquisition of prime properties and broadcast expertise. No prizes for guessing that such a unipolar world is fraught with its own risks, but that’s the name of the game.      

There are many, however, who feel that the merger may make room for a few new players to throw their hats into the ring. There are a few usual suspects, but one has to wait and watch to see how it all pans out.