Broadcasting networks Zee Entertainment Enterprises (Zee) and Culver Max Entertainment (erstwhile Sony Pictures Networks India) have agreed to hive off three Hindi channels—Big Magic, Zee Action and Zee Classic—to allay any anti-competitive concerns of the Competition Commission of India (CCI).
The fix “sufficiently” addresses “all possible competition concerns” in India, the watchdog said in a 58-page order approving the proposed merger.
CCI had given its approval on October 4 with certain modifications proposed by Zee and CME. It had then said details of these modifications would be shared in its detailed order.
“Considering the material on record…submissions made by the notifying parties during the oral hearing on September 29, followed by written submissions made on September 30 and October 4, and factors provided under sub-section (4) of Section 20 of the Act (Competition Act, 2002), the commission is of the opinion, that the composite voluntary remedy proposed by the parties under Regulation 25(1A) of the Combination Regulations, addresses the prima facie concerns of a likely appreciable adverse effect on competition (AAEC)…and the commission decided not to further proceed with the investigation,” the order read.
The note further said, “The commission, hereby, approves the proposed combination under sub-section (1) of Section 31 of the Act, subject to the compliance of modifications offered by the notifying parties under Regulation 25(1A) of the Combination Regulations, vide submission dated October 4, 2022.”
ET had on August 31 first reported that while CCI had raised some queries regarding the proposed merger, noting that the combined entity would enjoy “unparalleled” bargaining power and could increase the prices of its channels as well as earn higher profits, executives at both companies were confident that the questions were procedural and would have no impact on the merger.
ET had also reported that the two companies were ready to shut down smaller channels in order to ensure CCI approval.
The watchdog had first considered market share data from FY21 when the combined viewership share of Zee and CME channels in four genres—Hindi general entertainment channels (GEC), Hindi films, Bengali GEC, and Marathi GEC—was more than 40% in each market. However, in their submissions in September, the two companies informed CCI that they were facing falling market share in the key markets, as well as more and more global and local competition in the media and entertainment space.
The combined viewership share, which BARC India puts out every week, has gone down steadily in FY22 and year-to-date this year in the Marathi and Bangla markets, and the only two genres where their combined market share was higher than 40% were in the Hindi GEC and Hindi films.
In its order, CCI has noted that the aforementioned channels should not be sold to competitors Star India or Viacom18 Media or their respective affiliates.
Further, the approved purchaser conditions include that the buyer should be independent of and with no connection whatsoever with the resultant merged entity and its affiliates, nor be a past or present employee or director of these firms. The buyer should have the financial resources, expertise and incentive to maintain and develop the divestment business as a viable and active competitor, but should not be likely to create any prima facie competition concerns, nor give rise to a risk that the implementation of the order will be delayed.
The purchaser is expected to obtain all necessary approvals from the relevant regulatory authorities for the acquisition and operation of the divestment business, the order said.
Earlier last month, Zee shareholders had voted in favour of the company’s proposed merger with CME at an extraordinary general meeting (EGM) convened as per the National Company Law Tribunal’s (NCLT) order.
Zee had also received approval from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in July for the proposed merger, for which the two companies had signed a definitive agreement on December 22 last year.
The proposed deal will see Zee merging into CME and, after closing, the merged company will be publicly listed in India.
As per the agreement, Zee managing director and chief executive officer Punit Goenka will lead the merged company as its MD and CEO. The board will have nine directors, of whom the Sony Group will nominate five, while three will be independent.
