Disney is forewarned by CCI that the Reliance-Star India deal will negatively impact rivals

According to four individuals who spoke to Reuters on Tuesday, India's antitrust regulator has concluded that the $8.5 billion merger of Reliance and Walt Disney media holdings in India hurts competition because of their control over cricket broadcast rights.

The Competition Commission of India (CCI) has informally informed Disney and Reliance of its opinion and urged the firms to explain why a probe shouldn't be initiated, according to one of the sources. This is the worst blow to the companies' proposed merger thus far.

Requests for comment from CCI, Disney, and Reliance were not immediately answered. Since the CCI process is secret, all sources chose not to be identified.

One of the insiders stated, "The CCI's biggest pain point is cricket."

There are concerns over the combined business's pricing strength and ability to control advertising given that it will be mostly controlled by Reliance, the company founded by Asia's richest man, Mukesh Ambani, and own lucrative rights worth billions of dollars for cricket broadcasting.

With a combined 120 TV stations and two streaming services, the merger, which was announced in February, would create the largest entertainment company in India, competing with Netflix, Amazon, Sony, and Zee Entertainment. Antitrust experts had warned that the deal may come under close examination.

About 100 queries about the deal were previously privately posed to Disney and Reliance by the CCI. According to sources who spoke to Reuters, the businesses have informed the watchdog that in order to allay worries about market dominance and get an early clearance, they are ready to sell less than ten television channels.

A second source stated that the notification for the time being "is a precursor of things getting complicated" and that the corporations may still satisfy the CCI's concerns by making additional concessions. "The notice means that initially, the CCI thinks the merger harms competition and whatever concessions offered are not enough," said the individual.

According to a third source, CCI has given the businesses 30 days to reply and clarify their stance.