M/s M/s NBCUniversal Media, LLC, USA. — Combination C-2023/02/1005

Notice under Section 6(2) of the Competition Act, 2002 given by NBCUniversal Media, LLC

CORAM:

Ms. Sangeeta Verma Acting Chairperson

Mr. Bhagwant Singh Bishnoi Member

Order under Section 31(1) of the Competition Act, 2002

1. On 14th February 2023, the Competition Commission of India (‘Commission’) received a Notice under Section 6(2) of the Competition Act, 2002 (‘Act’) given by NBCUniversal Media, LLC (‘NBCUniversal’/‘Acquirer’). The Notice was filed pursuant to the execution of various agreements executed, inter alia, between the Acquirer, BTS Investment 1 Pte. Ltd. (‘BTS Investment’/ ‘Target 1’), and Bodhi Tree Systems VCC (‘BTS VCC’/‘Target 2’), each dated 8th February 2023 [Hereinafter, BTS Investment and BTS VCC are collectively referred to as ‘Targets’ and NBCUniversal and Targets are collectively referred to as ‘Parties’].

2. The Proposed Combination is envisaged as follows:

(i) BTS Investment Tranche: NBCUniversal proposes to acquire between 15.06% and 18.84% shareholding of BTS Investment on a fully diluted basis;

(ii) BTS VCC Tranche: NBCUniversal proposes to acquire between 3.33% and 7.48% shareholding of BTS VCC on a fully diluted basis;

provided that, under certain circumstances, NBCUniversal may reduce its investment in BTS Investment to an approximately 6.02% to 7.54% equity stake and eliminate its investment in BTS VCC entirely.

Further, it is submitted that the Proposed Combination will lead to an indirect acquisition (through the Targets) of Viacom18 Media Private Limited (‘Viacom18’) by NBCUniversal, and NBCUniversal intends to enter into a strategic licensing arrangement (‘Peacock Licensing Agreement’) with Viacom18 for the purpose of licensing NBCUniversal’s content hosted on the Peacock Over the Top (OTT) streaming service to the Jio Cinema OTT platform (Peacock OTT Tranche). The Acquirer has submitted that the Proposed Combination is conditional upon the completion of the Peacock OTT Tranche.

3. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 (‘Combination Regulations’), vide letter dated 7th March 2023, certain information and clarifications were sought from the Acquirers. The response was submitted on 20th March 2023 after seeking extension of time.

4. NBCUniversal is a multinational media and entertainment (M&E) company incorporated in the United States of America (USA) and part of the Comcast Group. It owns and operates (i) news and entertainment television networks, (ii) a motion picture company, (iii) television production operations, (iv) television stations group, (v) theme parks, and (vi) ad-supported streaming services, across the globe. The Comcast Group/NBCUniversal are present in India through various entities, which are either domiciled/registered in India or registered outside India but have a presence in India by way of sales or provision of services to the consumers. These entities are, inter alia, engaged in the business of (i) provision of a subscription video-on-demand (SVOD)

service called Hayu; (ii) provision of video-on-demand content through channels DreamWorks and E! Entertainment as well as Universal+ on JioTV and Jio Cinema streaming platforms; (iii) distribution of English language-based films by Warner Bros. Media LLC (Warner Bros); (iv) distribution of programming content from CNBC; (v) provision of direct-to-consumer paid product ‘CNBC Pro’; (vi) sale of TV programming to content providers; and (vii) provision of licensed NBCUniversal consumer merchandise.

5. The Targets belong to BTS Group, which is an investment platform and invests in the media and education sectors. 100% of the ordinary equity shares of the Targets are held by Asia Initiatives Pte. Ltd. (‘Asia Initiatives’) which, in turn, is jointly held by Lupa Systems LLC and Mr. Uday Shankar.

6. BTS Investment is a company incorporated under the laws of Singapore. It is currently in the process of raising capital from various investors, including reputed sovereign funds, multinationals, and global institutional investors.

7. BTS VCC is a non-umbrella Singapore Variable Capital Company incorporated under the laws of Singapore with the purpose of raising capital from various investors for investing in M&E, education, consumer health, and other consumer-related sectors in the Indian Ocean region, with a particular emphasis on India.

8. Viacom18, a 51:49 joint venture between RIL Group and Paramount Global (through affiliates), is present in the M&E sector. It is engaged, inter alia, in broadcasting business, OTT streaming, production and distribution of feature films, production and licensing of digital content, and other affiliated businesses. Viacom18 has a portfolio of 20 dedicated international feeds (such as Colors, MTV India International, Colors Rishtey, Colors Cineplex, and Colors regional channels) that are distributed in 130+ countries on linear distribution platforms. The Voot and Voot Kids OTT platforms are owned and operated by Viacom18.

9. The Commission in its previous order under Section 31(1) of the Act, pertaining to Combination Registration No. C-2022/07/951, approved the amalgamation of Reliance Projects and Property Management Services Limited’s Jio Cinema Business Undertaking with Viacom18, following an investment by BTS Investment and RPPMSL (‘BTS-Viacom Transaction’). Pursuant to the completion of this transaction, RIL Group, Paramount Group, and BTS Investment will hold joint control over Viacom18 (including Jio Cinema OTT).

10. It is submitted that there are no overlaps between the business activities of the Parties. However, based on the activities of the Acquirer as well as Viacom18 in India, the Acquirer has identified the following horizontal overlaps: a. Retail supply of audio visual (AV) content through OTT platforms It is submitted that the Acquirer is present through Hayu (available both as a direct-to-consumer standalone service and as an on-demand channel on Amazon Prime), and provision of video-on-demand content through channels DreamWorks and E! Entertainment on JioTV. Viacom18 is present through Voot and Voot Kids and through Jio Cinema OTT (post the BTS-Viacom Transaction).

b. Licensing of AV content in India NBCUniversal is engaged in the licensing of AV content to television and digital media businesses in India. Viacom18 operates in this market through Viacom Motion Pictures and Tipping Point.

c. Supply of films to third-party distributors and exhibitors for theatrical release in India It is submitted that NBCUniversal does not have any production houses dedicated to movie production in India. It produces movies outside India for global audiences, some of which may also be distributed for theatrical release in India. This distribution is undertaken by Warner Bros in India, with whom NBCUniversal has an arms-length contractual arrangement for the same. Viacom18, through Viacom Motion Pictures, also undertakes the production and distribution of feature films in India for theatrical release. The broad market of supply of films to third-party distributors and exhibitors for theatrical release in India may be segmented on the basis of language such as Hindi, English, and regional. It is submitted that NBCUniversal and Viacom18 exhibit overlap in the narrower segment of supply of English films only.

d. Merchandise licensing in India Merchandise licensing consists of developing and selling a variety of products based on existing and new characters of their respective brands. It is submitted that these activities are carried out by NBCUniversal and Viacom18 in their capacity as master licensors of intellectual property, who provide license to third-parties to manufacture and distribute products in India. NBCUniversal carries out this function through an agency relationship with Black White Orange. Viacom18 licenses the products developed by the Viacom group as well as third-parties to Viacom18 Consumer Products. It is also submitted that merchandise licensing is an ancillary business activity for both NBCUniversal and Viacom18.

11. With regard to vertical overlaps, it is submitted that there is an existing relationship on account of licensing of AV content in India (upstream market) by Comcast Group (through Universal Studios Limited and NBCU Global Networks Asia Pte. Ltd.) and (i) operation and wholesale supply of TV channels in India (such as Colors, Nickelodoen, VH1, and Comedy Central) and (ii) retail supply of AV content on OTT platforms (downstream markets) by Viacom18. Further, the Acquirer has also submitted that a potential vertical relationship will arise on account of the Peacock Licencing Agreement.

12. The Commission decided to leave the delineation of the relevant market open as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in the relevant market.

13. As regards the market for retail supply of AV content through OTT platforms in India, it is observed that the Acquirer does not have any independent presence (i.e., via its own OTT platform) in this market. Based on the submission of the Acquirer, the combined market share of the Acquirer and Viacom18 is in the range of [0–5]% based on revenue and total watch time. Further, the combined market share based on monthly active users is not likely to raise competition concerns. The incremental market share is insignificant for each of the abovementioned parameters. Moreover, there are competitors such as Netflix, Amazon Prime Video, Disney+ Hotstar, and MX Player, which will continue to compete post the Proposed Combination.

14. As regards the market for licensing of AV content in India, it is submitted that the combined and incremental market shares of NBCUniversal and Viacom18 is between [0–5]% based on revenue. Competitors include Applause Entertainment, Excel Entertainment, Red Chillies Entertainment, Walt Disney Pictures, Sony Pictures, Legendary Pictures, and Lionsgate Films.

15. As regards market supply of films to third-party distributors and exhibitors for theatrical release in India, the combined and incremental market share of NBCUniversal and Viacom18 is between [0–5]% based on number of films and gross box office collections. Other large competitors include Reliance Entertainment, Dharma Productions, Cape of Good Films, Nadiadwala Grandson Entertainment, and T-Series. In the narrow sub-segment for English film distribution, the combined market shares of the entities ranges between [25–30]% based on the number of films. The incremental market share in the market for production and supply of English films is [5–10]%. Competitors in this sub-segment include Walt Disney Company, Sony Pictures, and Legendary Pictures.

16. With respect to the market for merchandise licensing in India, it is submitted that, being an ancillary business activity for NBCUniversal and Viacom18, it represents an insignificant portion of their revenue. Further, the combined market shares of NBCUniversal and Viacom18 on the basis of revenue is also minuscule.

17. As regards the vertical relationship, based on the submission of the Acquirer, it is observed that the market share of Comcast Group in the upstream market of licensing of AV content in India is not likely to raise competition concerns. The market share of Viacom18 in the downstream market for operation and wholesale supply of TV in India is in the range of [10–15]% on the basis of Gross Rating Point of Broadcast Audience Research Council. There are other large competitors in the downstream market such as Zee Entertainment Enterprises Limited, Sony Pictures Networks India, Private Limited, Disney Star, and Sun TV Network. The market share of Viacom18 in the downstream market for retail supply of AV content through OTT platform is between [0–5]% based on revenue.

18. Further, it is submitted that, pursuant to the Peacock Licensing Agreement, NBCUniversal will make available certain content on Jio Cinema OTT exclusively on a short-term basis (which will introduce Peacock brand to India), prior to such content being available on the competing platforms. Currently, NBCUniversal also licenses content to other OTT platforms such as Amazon Prime and Netflix. It is also submitted that licensees too enter arrangements with multiple licensors for a wide variety of content. Further, the presence of Viacom18 in the market for retail supply of AV content through OTT platforms, as discussed in the foregoing paragraph, is not likely to raise any competition concerns.

19. Based on the foregoing, it appears that the Proposed Combination is not likely to foreclose competition in any market in India.

20. Considering the material on record, including the details provided in the notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

21. The order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

22. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

23. The Secretary is directed to communicate to the Acquirer accordingly.