The Competition Commission of India (CCI) has given its nod for the mega Zee-Sony merger deal. This comes only after both parties to the combination committed to sell three Hindi channels, so as to address the regulator’s initial prima facie concerns that the combine could result in appreciable adverse effect on competition (AAEC).

The voluntary structural remedies — filed with CCI on October 4 — involved selling of three Hindi Channels, namley Big Magic, Zee Action and Zee Classic (divestment channels), as per the final order issued by CCI on October 4 and made public on Wednesday.

Mega merger

The mega merger of homegrown media network Zee Entertainment Enterprises Ltd (ZEE) and Bangla Entertainment Private Ltd (BEPL) with Culver Max Entertainment (CME), an indirect wholly owned subsidiary of Sony Group Corporation, was announced in September last year. This deal will create a $10 billion TV enterprise in the country.

The resultant entity from this mega merger will create the largest broadcasting house in India with 92 television channels, vast content, higher market shares in Hindi GEC, Hindi Films, Marathi GEC, and Bengali GEC.

Show cause notice

CCI had, on August 10 this year, issued a show cause notice contending that the proposed combination prima facie is likely to result in AAEC. However, post the combining parties offering a voluntary structural remedy, the competition regulator blessed the deal, the final CCI order confirmed. 

Abneesh Roy, Executive Director, Nuvama Institutional Equities, said that CCI is now more or less fully done. “Three very very small channels needed to be sold. Big Magic is a free to air channel that Zee had acquired few years back. We see very little impact of this on numbers of Zee and Sony,” Roy added.

Competition to Star, Disney

This mega merger could become a serious contender to replace market leader Star and Disney in the medium to long term, said experts.

Zee and Sony announced their merger on September 22 last year. After a 90-day period to conduct due diligence for the process which ended on December 21 last year, the ZEE Board approved the merger with CME.

Zee Board said that while Sony will hold a 50.86 per cent stake in the merged entity, promoters of ZEEL will hold 3.99 per cent, and the other ZEEL shareholders will hold a 45.15 per cent stake in the combined company.

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