The proposed merger between Zee Entertainment Enterprises (ZEEL) and rival Sony Pictures Networks India (SPNI) is inching to a closure, with the firms agreeing to sell three Hindi channels to mitigate regulatory concerns.
The media companies have voluntarily agreed to divest Hindi general entertainment channel Big Magic and Hindi film channels Zee Action and Zee Classic, according to the proposal filed with the Competition Commission of India (CCI). All the three channels proposed to be sold off are owned by ZEEL.
ZEEL and Sony have a combined viewership share of 36% in the Hindi general entertainment segment, according to Broadcast Audience Research Council of India (Barc) data.
The merger, which would create the country’s largest media entertainment firm, had received the antitrust regulator’s approval on October 4 with certain conditions such as ensuring no unfair dominance in any market. The companies had voluntarily agreed to changes proposed by CCI.
According to the CCI order, a number of requirements are to be fulfilled by the purchaser before buying the three channels. These include obtaining relevant regulatory approvals for the acquisition and divestment of the three channels.
The order had also stated that the merger should not create any “prima facie competition” concerns.
One of the conditions of CCI was that the purchaser of the channels that would be divested should not be Star India or Viacom18, both rivals to Zee and Sony.
Another condition for CCI approval states that the acquirer should be independent and with no connection with the resultant entity or its affiliates. Further, it should not be either a past or present employee or director of the merged firm.
In its order, CCI said that the companies – ZEEL and SPNI – agreed to the changes following its observations that the deal is likely cause an “appreciable adverse effect on competition”.
On August 3, the competition watchdog had sent notices to the two companies, stating its initial review of the proposed deal terms the merged entity’s “humongous market position”.