Last week was particularly driven by action for the media and entertainment sector, with Disney Star sub-licensing the television broadcast rights of the International Cricket Council’s men’s events to Zee Entertainment Enterprises (ZEE), considered a masterstroke. Yet a Reuters report on the Competition Commission of India (CCI) expressed concerns about Zee’s proposed merger with Sony.
The report said the competition regulator noted that the merged entity could harm competition with its “unique bargaining power” and that further investigation was conducted. Suddenly, Puneet Goenka, the Managing Director and CEO of Zee, launched a triumphant coup to acquire the TV rights of ICC Cricket in Dubai. was adopted by the CCI note. ZEE’s interest in entering the sports genre is well known and the broadcaster had also participated in the Indian Premier League media rights bids. In May, the T20 league of UAE signed a long-term global media rights agreement with ZEE will exclusively telecast cricket matches in India and across the world on its TV channels and on its OTT platform ZEE5.
For ICC events, Disney+ will continue to be the exclusive rights-holder for streaming all tournaments on Hotstar, while ZEE will receive the T20 World Cup, Champions Trophy (2025) and ICC Men’s Cricket World Cup (2027) under- With 19 events.
Although television growth is declining, the medium is still important for the widely popular game of cricket in India. A GroupM ESP report earlier this year said sports ad spend on TV and digital in 2021 was 6,018 crores, higher than the pre-Covid 2019 numbers. Sports Cricket remains the most popular sport for 94% of AdEx.
Disney Star wins IPL TV rights for 23,575 in June and Zee is placing its bet on cricket to pay at least 40%-45% of the $3 billion spent for the ICC deal. ZEE is happy to grab a portion of Cricket which may later be added to the sports portfolio of the merged entity with Sony. Media industry watchers say the ICC Cricket deal may anger competitors.
Last year, Sony Group Corp had announced the merger of its Indian entity with Zee Entertainment Enterprises Ltd. to amalgamate its TV network, digital assets, library and streaming platform. Looking at the headlines on CCI’s queries, ZEE says they are part of the ongoing dialogue with the regulator.
“For such a merger, CCI can look at the market share of the parties in the production and supply of films and supply of TV channels,” said Abdullah Hussain, partner, DSK Legal.
If some segments have a higher combined market share, it may suggest a change. “Remedies can be structural or practical. Antitrust authorities generally prefer structural measures, but it all depends on the competition concerns identified,” Hussain said.
Ritika Ganju, partner, Phoenix Legal, agreed: “Structural measures can be like disinvestment, i.e. you reorganize your entity so that you have less market share. Behavioral measures may mean some dilution in exclusive deals and some anti-competitive behavior. For example, this could mean the removal of exclusivity in the distribution network.”
Ganju said that the CCI has, in the past, made necessary structural or behavioral changes and approval has been granted subject to these measures being implemented.
Hussain said that generally, parties are given a certain period after approval, say, six months, within which they must enforce a sale to a third party (assuming it is a remedy). “This third party sale would also need to be approved by the CCI,” he explained.
Will this delay the merger of ZEE-Sony? “It will take some time to decide on the detailed terms of any remedy proposal,” Hussain said. Zee was earlier expected to get the approval by September-October but it seems difficult, said Ganju, adding that the CCI is known for its speed and efficiency and was working in full covid.
Karan Taurani, research analyst at Elara Capital, said the only implication of the delay would be on the share price and valuation. “There will be delays in the upward movement of these,” he said.
Media experts say there is no worry about the merger getting blocked. “There is no basis for this. Even with their combined size they would be smaller than the market leader Disney Star,” said one, declining the name.
But unless it is approved, there is tension in the air for Sony and Zee.
Suchi Bansal is the Media, Marketing and Advertising Editor of Mint. The Ordinary Post will look into the important issues related to the three. Or just fun stuff.
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