Sony to shut down Zee channel to address CCI’s concerns over deal

On Friday, Zee offered to shut down a leading general entertainment channel, which had 20-30% market share in the general entertainment channel space, to submit to the Competition Commission of India (CCI), two people with direct knowledge Vikas said on condition of anonymity.

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“Zee has agreed to shut down one of its leading entertainment channels. Removing the business of this channel from the purview of the merger will ensure that the aggregate market share of the merged entity is reduced in certain key sectors. This can assure the CCI that any monopolistic pricing power of the merged entity is curtailed and the dominance of potential audiences is kept under check,” said one of the two people on the condition of anonymity. .

The identity of the channel Zee has agreed to shut down is not known.

A Zee spokesperson declined to comment, while an email sent to Sony did not elicit any response.

This is the first time that Zee and Sony have offered a structural measure, the person said. About a fortnight ago, Sony-Zee submitted a set of “behavioral measures” to the CCI for the deal, which did not include structural changes such as winding up of any channel business or certain channels to mitigate the threat of competition. sell to

The move is aimed at allaying CCI’s concern that India’s largest media merger could give Zee-Sony unprecedented pricing power, which could hurt the prospects of other TV channels in the entertainment broadcasting industry.

“After the hearing before the CCI on Thursday, Zee and Sony have presented their “remedy” by filing a reply on Friday (September 30) to the original merger application filed with the CCI a few months ago,” the first person said.

Subhash Chandra’s Zee’s merger with Sony Pictures will result in at least 92 TV channels, comprising all sports and entertainment channels from both companies and multiple video streaming platforms under a single entity, in which Sony will hold a majority stake.

Both the companies have received approval from Securities and Exchange Board of India (SEBI), shareholders and National Company Law Tribunal, Zee Entertainment and Culver Max Entertainment Pvt Ltd. Ltd (formerly Sony Pictures Networks India), but has struggled to assure the antitrust regulator that the merger will not affect competition.

As per the people mentioned above, both the companies are now expected to get the CCI’s nod as they have offered a structural measure. On 29 September, Zee and Sony made a presentation before the CCI to address the regulator’s concern over market dominance.

In the meeting, Zee and Sony resolved not to abuse their market dominance and avoid charging advertisers or DTH providers above average for a certain period after the merger.

In August, the CCI, through a notice to the two companies, said that their “gentle market position” after the merger would allow them to enjoy “unique bargaining power”.

The regulator was particularly concerned about the impact of the merger on advertisers’ fees and channel pricing in the Hindi language segment.

Zee Entertainment shares rose 2.85% 258.20 on BSE on Friday.

In their earlier attempt to address antitrust concerns, Sony and Zee suggested that the merged entity provide mandatory price incentives and discounts on fair and non-discriminatory terms to all channel distributors, such as direct-to-home satellite operators. was open to Fixed period after the deal.

In addition, Zee and Sony proposed to create and operate an “independent advertising vertical” for a specific period of time.

The latest structural measures may prevent the CCI from ordering a detailed inquiry into the impact of the merger, which could delay approval by several months.

In December, Sony and Zee Entertainment announced plans to merge their entertainment and sports television channels, film assets and video streaming platforms to create the broadcasting behemoth in India to compete with The Walt Disney Company.

While Sony is popular among the audience for its sports channels and superhit reality shows like Kaun Banega Crorepati hosted by Amitabh Bachchan, Zee is a household TV name in India. It was founded in 1992 by Chandra under the Essel Group, often referred to as the “Father of Indian Television”.

In 2019, the founders of Zee had to sell their stake in the company to curb debt. And in 2021, when the company was prone to a hostile takeover, a merger deal with Sony came after Zee’s promoters were embroiled in a boardroom conflict with Invesco, Zee Entertainment’s largest public shareholder.

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