Disney-RIL merger: IPL advertisers to lose bargaining chip?

Negotiating for IPL ad rates is likely to be challenging as the merged entity is at an elevated position in terms of sports programming, share marketers

by Kanchan Srivastava
Published - March 01, 2024
3 minutes To Read
Disney-RIL merger: IPL advertisers to lose bargaining chip?

The consolidation of Walt Disney's Indian media business with Reliance Industries' Viacom18 is poised to have a significant impact on the bargaining power of advertisers, say industry experts.

The Disney-Viacom merger will give rise to a formidable entity worth Rs 70,000 crore, boasting over 70 TV channels from Star India and 38 from Viacom18 in eight languages. This is in addition to the two major OTT platforms - Jio Cinema and Hotstar - and two film studios owned by each conglomerate.

"The merger may hurt advertisers as the merged entity's negotiating power will be elevated, particularly in sports programming," stated a Chief Marketing Officer of a leading FMCG company.

The first event to deal with this possible impact will be the Indian Premier League 2024 (IPL), set to begin in less than three weeks on March 22.  

In 2023, when Star India and Viacom18 competed vigorously for advertisers' attention, advertisers secured favourable rates for their campaigns on both TV and OTT platforms. However, such advantages may dwindle in the foreseeable future, opine marketers. 

"We may encounter challenges negotiating ad rates for IPL matches. Additionally, ad space purchasing may become platform-agnostic as we will invest in whichever offers more competitive pricing," remarked another CMO, speaking on condition of anonymity.

Disney and Jio currently dominate an estimated 75-80% of the Indian sports market across linear TV and digital platforms, collectively amassing nearly Rs 4,700 crore in advertising revenue during IPL 2023, as per findings from market research and analysis firm Redseer Strategy Consultants.

"This dominance, particularly in cricket, positions them to capture a significant portion of the overall advertising market, demonstrating robust growth in an industry where sports serves as a key driver of viewership on both linear TV and digital platforms," noted Karan Taurani, Senior Vice-President at Elara Capital.

Taurani, however, emphasized that the monopoly in sports properties may eventually result in higher ad revenues for the merged entity. 

Industry experts state that while last year's IPL ad sales focused on the dichotomy between TV and Digital due to the unique circumstance of broadcast and streaming rights being held by separate entities for the first time, this year's narrative revolves around a more integrated approach of TV and digital. 

They note a shift in market sentiment towards positivity, with brands recognising the importance of investing in both digital and TV advertising, without sacrificing one for the other.

In a recent interview to e4m, Ashwin Padmanabhan, President - Investments, Trading and Partnerships, GroupM – India, had said, “I see 2024 will be a growth year for IPL which will contribute to the overall AdEx growth.”