Reliance Media-Carnival deal gets CCI clearance

New Delhi: Reliance MediaWorks, part of Anil Ambani-led group, has got the green signal from fair trade regulator CCI to sell its multiplex business to South-India based Carnival Films.

The proposed transaction will reduce Reliance Capital's overall debt by Rs 700 crore (Rs 7 billion) and is part of Reliance Capital's strategy to exit minority investments.

The deal will make Carnival the third largest multiplex operator with nationwide presence and over 300 screens.

In an order released today, the Competition Commission of India (CCI) said that "the proposed combination is not likely to have an appreciable adverse effect on competition in India".

As per the agreement executed on December 14, 2014, the film exhibition business of Reliance Media along with the food and beverages business which is a part of such film exhibition business (but excluding all forms of film exhibition through Internet, mobile or television of Reliance Media), would be transferred to Cinema Ventures Private Ltd (CVPL) -- a subsidiary of Reliance Media.

As many as 88 cinemas (72 multiplexes and 16 single screen cinemas) operated by Reliance Media having 238 screens are proposed to be transferred by Reliance Media to CVPL.

Following this Carnival will acquire 98 percent stake in CVPL whereas a director of Carnival will acquire the remaining 2 percent shareholding.

"It is noted that pursuant to the proposed combination, there are overlaps between Carnival, Stargaze and Reliance Media with respect to the multiplexes in seven cities namely Indore, Mumbai, Dindigul, Ghaziabad, Dehradun, Raipur and Ajmer," CCI said in its order.

However, CCI observed that in Indore, Mumbai, Ghaziabad, Dehradun, Raipur and Ajmer, "competition concerns may not arise as there are other multiplexes...In these cities exercising competitive constraint on the acquirer pursuant to the proposed combination in terms of the pricing and services offered within the cinemas".

In case Dindigul, the regulator said that "it is unlikely that the combination would result in increase in prices or would have an adverse impact on the amenities provided to the consumers in Dindigul".

The deal struck between Carnival Cinemas and Reliance MediaWorks, will exclude IMAX Wadala (Mumbai) and some other properties worth Rs 200 crore.

Reliance Capital is the parent firm of Reliance MediaWorks, which operates one of the largest cinema chains, under the brand 'BIG Cinemas'.