There is massive concentration and conglomeration taking place in the converged media landscape of India.
The Competition Commission of India's (CCI) decision-making is largely opaque and falls short of being evidence-informed. This risks it being seen as a facilitator of media oligarchies.
Nowhere is this more evident in the case of Reliance Industries Limited (RIL), an industrial group which has a major presence in multiple markets of broadcast audience, broadcast advertising and online video.
Successive governments' response to RIL's incremental expansion in the media economy shows the weaknesses in the existing regulatory framework.
This is evident in the recent coming together of RIL and the Indian arm of one of the largest global media conglomerates, Disney.
A decade of expansion
News reports portrayed this variously as an acquisition, a joint venture and a merger.
The principal actors — RIL, Viacom 18 and Disney — called it a joint venture, since they respectively held around 16, 46 and 36 percent in the new entity. But in effect, it is owned by RIL, since it has majority control in Viacom18.
The deal follows a decade of RIL’s expansion into the media and communication industries.
In 2012, RIL waded into TV broadcasting by taking over two established multi-lingual networks, TV-18 and ETV.
This also gave it ownership of Viacom18, then an ascendent player in the TV entertainment segment.
These acquisitions, while achieved in unorthodox ways, did not carry threats of market dominance. There existed rival networks with larger audience share in the news and entertainment segments, across linguistic markets.
But the scenario heralded by this recent deal is totally different.
Among the top 10 broadcasters in 2023, those owned by Viacom18 and Disney were together estimated to harvest a viewership share upwards of 40 percent.
In 2016, RIL entered mobile telecommunications with the launch of Jio. It profited from a state falling short on enforcing corporate disclosures, retrospectively revising policies and overlooking procedural violations.
Having gained a licence for mobile telecommunications, Jio weaned away subscribers from incumbent telcos by "predatory pricing" — a commercial strategy that also benefited from the CCI's regulatory magnanimity.
Regulatory response
Given the new combine's scale, and its implications for media, the CCI was expected to be precise and transparent in the queries sought from the companies involved.
News reports claimed CCI posed around 100 questions to Reliance and Disney. Neither the questions nor the responses are publicly available.
CCI's summary order was quick to infer that this arrangement “will not cause any appreciable adverse effect on competition in India”. It also felt that "the exact relevant market definitions for evaluating the proposed transaction may be left open".
The concept of relevant market, central to competition regulation, delineates the specific "product market" where substitutable offerings compete, such as news outlets in a particular language or subscription-based online video; and the "geographic market", the territory where comparable services are traded.
In refusing to flesh this out in the RIL-Disney case, the CCI lost an opportunity to clarify a longstanding grey area in India's complex, competitive and converging media economy.
This may be due to the time-consuming nature of this exercise, lobbies impeding such efforts, lack of internal capacity in the regulator and/or its inability to access requisite data from companies.
Multiple spheres of dominance
The combine heralds a high degree of concentration in two of the most lucrative TV segments, entertainment and news.
This will enhance its leverage over cable operators and direct to home operators.
Consequently, the new combine would wield market power in the wholesale business of TV distribution. It is unlikely that such a scenario will not impact the monthly tariffs paid by TV viewers.
Moreover, three online video platforms — Jio's Jio Cinema, Viacom18's Voot, and Disney's Hotstar — will be owned by the combine, who will garner 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 will not be surprising if Disney’s broadcast and/or HotStar's online offerings are offered by the combine at a premium to subscribers of Jio's rivals; or, some offerings are made exclusive to Jio's subscribers.
Facilitating the oligarchy?
Following CCI’s queries to the parties constituting the joint venture, feedback from others in the business, and comments by the Ministry of Information and Broadcasting — details of which are not public — the combine proposed to modify aspects of the joint venture.
This was to ensure CCI does not initiate a detailed and lengthy investigation into the implications of this combine on the competitive milieu.
The ensuing detailed report by CCI, dated end-August but made public in late-October, approved the joint venture with the modifications proposed. However, this order falls short on procedural, substantive and empirical counts.
Astonishingly, it contains numerous redactions of words, numbers and even complete sentences — without any explanations whatsoever.
At places these seem to mask details of the internal shareholding and/or indirectly owned subsidiaries of the companies involved; at other places, revenues of individual entities are masked. Sometimes the names of entities and subsidiaries involved are blacked out.
This does not augur well on the institutional transparency and empirical accountability expected in an order from a regulatory body.
One of the proposals by the combine is to divest its presence in four TV segments (Marathi and Kanada entertainment, Bengali films, and Children) where the combined market share of its constituent broadcasters is more than 40 percent.
Magnanimous as this sounds, there still remains TV segments in at least two markets (Hindi entertainment and Hindi films) where the combine enjoys over 33 percent market share — the nearest rival having 15 percent share. CCI's report is unconvincing why this will not cause appreciable adverse effect on competition.
Significantly, these voluntary divestments to offset market dominance were based on viewership share. This ignores evidence on the advertising share garnered by the combine.
In recent years, Viacom18 and Disney together gathered, by conservative estimates, a hefty 45 percent share of total TV advertising. The extent this may adversely impact the competitive milieu is not compellingly argued in CCI’s rudimentary analysis.
For instance, such a large market share will endow the combine with dis-proportionate power in dealings with relevant actors: it could extract higher rates from advertisers and/or goad advertising agencies to reduce their commissions.
That the new entity will wield a large degree of market share is starkly visible in the online video market. The report estimates three video streaming platforms under the combine to garner about 40 percent of advertising revenues in this market — with each of the nearest rivals accruing, on an average, less than 10 percent.
RIL's entry and conduct in telecommunications had precipitated numerous dislocations in that business. Its recent consolidation across broadcasting and online video will cause dislocations in the converged media landscape.
This raises questions about equitable opportunities and constraints to innovation in the competitive milieu of one of the most dynamic media economies.
(The author is an Associate Professor teaching media policy in the Center for Culture, Media and Governance at Jamia Millia Islamia in New Delhi. This article was originally published under Creative Commons by 360info)
