The handmaiden of India's media oligarchies

There is tremendous concentration and conglomeration taking place in India’s converged media landscape.

The decision-making of the Competition Commission of India (CCI) is largely opaque and not based on facts. This risks being seen as an enabler of media oligarchies. Nowhere is this more evident in the case of Reliance Industries Limited (RIL), an industrial group that has a large presence in multiple markets of broadcast audience, broadcast advertising and online video.

The response of successive governments to RIL’s incremental expansion in the media economy highlights the weaknesses in the existing regulatory framework.

This is evident from the recent come together of RIL and the Indian arm of one of the largest global media conglomerates, Disney. News items depicted this variously as an acquisition, a joint venture and a merger. The key players – RIL, Viacom18 and Disney – called it a joint venture as they held about 16, 46 and 36 percent stakes in the new entity respectively. But in fact it is owned by RIL as it has majority control in Viacom18.

The deal follows a decade of RIL’s expansion into the media and communications industry.

In 2012, RIL forayed into TV broadcasting by acquiring two established multilingual networks, TV-18 and ETV. This also made it the owner of Viacom18, an emerging player in the TV entertainment segment at the time.

In 2016, RIL mobile telecommunications introduced with the launch of Jio. It benefited from a state that failed to enforce corporate disclosures, retroactively reviewing policies and overlooking them procedural violations.

After acquiring a mobile telecommunications license, Jio siphoned off subscribers from incumbent telecoms through “predatory pricing” – a commercial strategy that also benefited of the CCI’s regulatory magnanimity.

RIL’s previous acquisitions, although accomplished in unorthodox ways, did not pose a threat of market dominance. Rival networks existed with a larger audience share in the news and entertainment segments, in language markets.

But the scenario heralded by this recent deal is completely different. Of the top 10 broadcasters in 2023, Viacom18 and Disney-owned broadcasters would reap a combined audience share more than 40 percent.

The regulatory response

Given the size of the new combination and its implications for the media, the CCI was expected to be accurate and transparent in the queries posed by the companies involved. News items claimed that the CCI asked about 100 questions to RIL and Disney. Neither the questions nor the answers are public.

The CCIs summary order quickly concluded that this arrangement “will not have an appreciable negative effect on competition in India.” It also opined that “the exact relevant market definitions for evaluating the proposed transaction can be left open.”

The concept of relevant marketwhich is crucial for competition regulation, defines the specific “product market” where substitutable offerings compete, such as news broadcasts in a particular language or subscription-based online video; and the ‘geographic market’, the area where similar services are traded.

By refusing to pursue this further in the RIL-Disney case, the CCI has missed an opportunity to clarify a long-standing gray area in India’s complex, competitive and convergent media economy. This may be due to the time-consuming nature of this exercise, lobbies hindering such efforts, a lack of internal capacity at the regulator and/or the regulator’s inability to access necessary data from companies.

Multiple spheres of dominance

The combination heralds a high degree of concentration in two of TV’s most lucrative segments: entertainment and news. This will increase its influence over cable operators and direct-to-home operators.

Consequently, the new combination would exercise market power in the field of wholesale television distribution. It is unlikely that such a scenario will have no impact on the monthly costs that TV viewers pay.

In addition, three online video platforms – Jio’s Jio Cinema, Viacom18’s Voot and Disney’s Hotstar – will be owned by the combination, which has more than 30 percent of the existing user base. This paves the way for RIL’s telecom arm Jio to bundle broadcast and native online video content produced by Viacom18 and Disney for its subscribers.

It won’t be surprising if Disney’s broadcast and/or HotStar’s online offerings are offered by the combination at a premium to subscribers of Jio’s rivals, or if some offerings are made exclusively to Jio’s subscribers.

Facilitating the oligarchy?

Following queries from the CCI to the parties forming the joint venture, feedback from others in the company and comments from the Ministry of Information and Broadcasting – the details of which are not public – the combination proposed to change aspects of the joint venture. This was to ensure that the CCI would not initiate a detailed and lengthy investigation into the impact of this combination on the competitive environment.

The next one detailed report from the CCIdated in late August but made public in late October, the joint venture approved the proposed changes. However, this order falls short on procedural, substantive and empirical levels.

Amazingly, it contains countless redactions of words, numbers and even entire sentences – without any explanation. In some places these appear to mask details of the internal shareholdings and/or indirect subsidiaries of the companies involved; in other places, individual entities’ revenues are masked. Sometimes the names of the entities and subsidiaries involved are obscured.

This does not bode well for the institutional transparency and evidence-based accountability expected from an order from a regulatory body.

One of the combination’s proposals is to divest its presence in four TV segments (Marathi and Kanada entertainment, Bengali films and children’s) where the combined market share of the constituent broadcasters is more than 40 percent.

As magnanimous as this sounds, there are still TV segments in at least two markets (Hindi entertainment and Hindi films) where the combination has a market share of over 33 percent – the nearest competitor has a market share of 15 percent. The CCI’s report is not convincing as to why this will not have a noticeable negative impact on competition.

Significantly, these voluntary divestitures to offset market dominance were based on audience share. This ignores evidence about the advertising share garnered by the combination. In recent years, Viacom18 and Disney together have collected, according to conservative estimates, a hefty 45 percent share of total TV advertising. The extent to which this could have a negative impact on the competitive environment is not convincingly argued in the CCI’s rudimentary analysis.

For example, such a large market share will give the combination disproportionate power in dealing with relevant actors: it could demand higher rates from advertisers and/or push advertising agencies to reduce their commissions.

The fact that the new entity will have a large market share is clearly visible in the online video market. The report estimates that three video streaming platforms under the banner will generate around 40 percent of advertising revenue in this market – with each of its closest rivals accounting for less than 10 percent on average.

RIL’s entry and conduct in telecommunications had led to numerous disruptions in that sector. Its recent consolidation in broadcasting and online video will cause disruptions in the converged media landscape.

This raises questions about equal opportunities and constraints on innovation in the competitive environment of one of the most dynamic media economies.

Originally published under Creative Commons Through 360info.