Reliance Industries-promoted Viacom18 and Walt Disney-owned Star India are hopeful of completing their merger by October, when the Competition Commission of India (CCI) is also expected to issue its order, officials familiar with the matter told ET.
The National Company Law Tribunal (NCLT) has already put the merger scheme between Star and Viacom18 for final disposal. The merger, which was announced on February 28, is expected to receive the NCLT green signal as creditors and shareholders of both companies have approved it.
“The biggest barrier to the merger proposal is the CCI approval. Once the competition watchdog approval comes, the merger deal will be more or less concluded. The expectation internally is that the CCI approval might come in October,” said one of the officials tracking the development.
As part of its probe into the likely impact of the merger on the competitive landscape, CCI has started reaching out to other broadcasters, streaming platforms, TV distributors, and advertisers.
“CCI has reached out to us a couple of weeks back to know our views about the Star-Viacom18 merger,” said a top executive with a rival media firm, on condition of anonymity.
The executive stated that this is a standard approach adopted by the CCI in all merger transactions, enabling the competition watchdog to assess a merger’s impact in an industry.
“Even in the Sony-Zee merger case, CCI reached out to all the key players in the industry,” the executive said, adding that the commission typically issues an order a few months after its industry outreach.
Both Star and Viacom18 have already made their submissions to the CCI, arguing that the merger will not have an appreciable adverse impact on the M&E industry in the country since there is enough competition in the market, said a third media executive who didn’t want to be named.
Media analysts predict that Sony, Zee, Sun, Netflix, Prime Video, and YouTube will provide sufficient competition to Star-Viacom18 in both linear TV and streaming segments.
“While they (Star-Viacom18) will have a lot of synergistic benefits together, which we also talked about when we were trying to do our merger (Sony-Zee), it does not restrict or make us less capable of competing with them,” Zee Entertainment CEO Punit Goenka said during the company’s Q1 earnings call when asked about the impact of the Star-Viacom18 merger on Zee.
ET had reported in March that the CCI will conduct a more thorough investigation into the merger between Star and Viacom18 because it has the potential to disrupt the M&E business. In May, Star and Viacom18 filed a combination notice with the CCI seeking approval for their merger deal.
With over 100 TV channels across entertainment and sports and two of the top streaming platforms, Disney+ Hotstar and JioCinema, Star-Viacom18 will have a commanding presence in both segments, with the nearest competitor being a distant second in both segments.
The combined operating revenue of Star and Viacom18 was roughly Rs 25,000 crore in FY23, with the combined revenue of the nearest competitors in TV (Zee) and streaming (Netflix) being Rs 11,000 crore.
The combination will make Star-Viacom18 the biggest player in sports with properties like Indian Premier League, India international bilateral cricket, International Cricket Council, Indian Super League, and Pro Kabaddi League.
However, Star and Viacom18 argue that these properties were acquired through transparent open market bidding, where competing players also bid aggressively. The argument was made that the accumulation of sports rights, which are awarded for a limited time, cannot significantly impact competition.
In its order in the now-defunct Sony-Zee merger scheme, CCI ordered Sony-Zee to sell three channels to mitigate potential adverse impact on the sector.
Legal experts believe that the CCI might order Star-Viacom18 to divest certain assets since this merger will lead to the creation of a much bigger entity than the Sony-Zee combine.
