Zee in a statement said it continues to take all the required legal steps to complete all the necessary approval processes for the proposed merger.
Zee Entertainment Enterprises has written to the Competition Commission of India (CCI) in order to get the latter’s permission to merge its operations with Sony Entertainment. The firm is citing the latest TV viewership data which shows that the merged entity would have a lower market share and will not lead to any concentration of power.
A merger between the Indian unit of Japan’s Sony and Zee Entertainment to create a $10 billion TV enterprise will potentially hurt competition by having “unparalleled bargaining power”, the country’s antitrust watchdog found in an initial review, according to an official notice seen by Reuters.
The Competition Commission of India’s (CCI’s) August 3 notice to the two companies stated the watchdog is of the view that a further investigation is merited. Sony and Zee in December decided to merge their television channels, film assets and streaming platforms to create a powerhouse in a key media and entertainment growth market of 1.4 billion people, challenging rivals like Walt Disney Co.
The CCI’s findings will delay regulatory approval of the deal and could force the companies to propose changes to its structure, three Indian lawyers familiar with the process said. If that still fails to satisfy the CCI, it could lead to a prolonged approval and investigation process, they added.
Zee in a statement said it continues to take all the required legal steps to complete all the necessary approval processes for the proposed merger. The CCI and Sony in India did not immediately respond to requests for comment.
In its 21-page notice, the CCI said its initial review shows the proposed deal would place the combined entity in a “strong position” with around 92 channels in India, also citing Sony’s global revenue of $86 billion and assets of $211 billion.
“The CCI will examine if the combined entity would reduce competition or if the other competitors could maintain sufficient pressure on the combined entity. If the combined market shares are very high and other competitors are not able to exert sufficient competitive pressure, the CCI may ask parties to give certain remedies (including divestitures) as a condition for approving the transaction. The CCI has asked parties for remedies in the past where the combined market share was as low as 30 per cent,” said Vaibhav Choukse, Partner & Head of Practice, Competition Law at JSA.
Zee’s managing director Punit Goenka said in a media interview in December he sees the relative value of the combined entity as “potentially close to $10 billion” and expected all necessary approvals by October this year.