News Corp gets CCI nod for STAR's acquisition in ESS

News Corp is aiming to buy ESPN's 50% equity interest in ESPN Star Sports

Rupert Murdoch-owned News Corp has got the clearance from the Competition Commission of India (CCI) for the acquisition of ESPN’s interest in the Asian sports broadcasting joint venture company ESPN STAR Sports (ESS), which owns Star Sports, Star Cricket and ESPN.

In June this year, ESPN, owned by the Walt Disney Company, and Star, owned by News Corp, had call off their joint venture 16 years after it was formed. The two companies had entered into a definitive agreement under which STARTV-ATC, an indirectly wholly owned subsidiary of News Corp was to buy ESPN’s 50% equity interest in ESS. The proposed acquisition would result in  change in ownership of the ESS India Subsidiaries upon the completion of the transaction. The deal also meant that News Corp will have full control of ESS which operates 25 television networks and three broadband networks covering 24 markets in Asia, while Disney will exit from sports in Asia. 

STARTV-ATC appointed Dhall Law Chambers headed by Vinod Dhall, former chairman, CCI with Senior Associate P Ram Kumar on their pre-merger filing with the CCI, which approved the transaction.

Taking to Business Standard, Dhall said, “The competition law in India requires every acquisition or merger, above a certain threshold in assets or turnover, to be looked into by CCI if it is going to hurt the competition in any manner. So we filed with the CCI as per the law to get its approval.” 

The CCI observed that though the proposed combination results in transfer of joint control to sole control, it would not result in elimination of any competitor from the market as NWS and ESPN, the joint venture partners are not competing with each other in the market for broadcasting of sports channels in India.

Dhall noted, “The CCI observed that the broadcasting sector in India was regulated by the Telecom Regulatory Authority of India (TRAI), which has framed various regulations that prescribes the maximum rate to be charged by a broadcaster for its television channels. Further, the mandatory sharing of live broadcasting signals for sporting events of national importance with Doordarshan constrains the bargaining strength of broadcaster vis-a-vis MSOs/DTH operators/advertisers.” 

CCI has also taken into account that other sports channels like Ten Sports, Ten Action Plus, Ten Golf, Ten Cricket, DD Sports, Neo Prime, Neo Sports Plus, Sony Six pose effective competition for channels owned by ESS and thus the proposed combination is not likely to give rise to any adverse competition concern in India.

Recently, STAR India has won the BCCI media rights for international cricket played in India for a whopping Rs 3,851 crore.