An $8.5 billion (£6.43 billion) merger between Disney and Reliance Industries has received preliminary approval from India’s competition regulator.
The company, in which billionaire Mukesh Ambani’s Reliance Industries will hold a majority stake, is expected to create India’s largest entertainment conglomerate, competing with Sony, Netflix and Amazon.
The joint venture will receive broadcasting rights for the majority of Indian sporting events, including coveted cricket tournaments.
The merger is expected to be completed in the next six months, with Ambani’s wife Nita Ambani reportedly set to take over as chairman.
The deal is “subject to compliance with voluntary changes,” the Indian competition authority said in a press release on Wednesday.
There had previously been concerns about whether the merger would give the two companies control over broadcasting rights for cricket, the country’s most popular sport with a huge fan base.
Disney and Reliance’s streaming services have been attracting Indian subscribers with free live streams of cricket matches for years.
According to Reuters news agency, the two companies spent $9.5 billion on television and streaming rights for the Indian Premier League (IPL), the T20 World Cup and International Cricket Council matches.
The competition authority had expressed concerns that the new company could increase advertising prices for these games.
However, the two companies have reportedly pledged not to excessively increase advertising rates for cricket match streams.
A source told Reuters that they also announced plans to sell seven to eight of their non-sports TV channels to balance their revenues.
Through the merger, the two companies also own the Indian broadcast rights for Wimbledon, MotoGP and the English Premier League (EPL).
The deal “will create a huge giant in the digital entertainment space,” Gurmeet Chadha, managing partner of financial advisory firm Complete Circle, told news channel CNBC-TV18.
“They have the necessary strength in terms of content and their technical capabilities are well known. They have the necessary reach in terms of distribution. They have the necessary analysis capabilities and insights into what content is being consumed where,” he said.
In a country of 1.4 billion people and 90 percent internet penetration, this has “huge, huge long-term implications,” he added.
