Sony Pictures - Zee Entertainment Merger

Sony Pictures – Zee Entertainment Merger will hurt competition – CCI

According to media reports, the highly anticipated merger between entertainment companies, Sony Pictures Networks India and Zee Entertainment, is going to get delayed as the Competition Commission of India has found out the merger will hurt competition in the Indian market.

The Competition Commission of India (CCI), which is a regulatory body under the Ministry of Corporate Affairs, is responsible for implementing and enforcing the Competition Act 2002 in the country. CCI promotes competition in the Indian market and ensures no merger, acquisition, or transfer adversely impacted the existing competition in the market.

In the case of a merger between Sony Pictures and Zee Entertainment, the Competition Commission of India said in the notice that the newly created entity will potentially hurt competition in the Indian entertainment industry. As the new entity will also have unparalleled bargaining power in the market, CII will conduct further investigations about the merger.

If the merger goes through, the newly formed entity will have more than 90 channels under its name. The large amount of revenue earned by Sony and the volume of assets owned by Sony and Zee would place the combined entity in a “strong position”.

The Hindi segment in the Indian broadcasting industry will be hugely impacted by the merger between Sony Pictures and Zee Entertainment as after the merger, 45% of the channels in the segment will be under the control of the new entity. Star India owned by Disney will be placed at a distant second position. This will potentially hurt the competition within the segment. There is also a possibility that the newly created entity will use its market position to increase the prices of advertisements and hence earn higher profit.

Several lawyers who have knowledge about the deal told Reuters News Agency that the recent notice sent by CCI to Sony and Zee Entertainment will cause a delay in getting regulatory approval for the deal. Any such delay will hurt the market positions of the parties which will force them to make changes in the merger deal.

If the merge deal does not get approval from CCI even after the structural changes, then the procedure will move onto a time-consuming regulatory investigation and approval procedure. There are also possibilities of the merger moving onto lawsuits and litigation.

Zee Entertainment said in a statement that the company will do whatever it is legally necessary to complete approval processes for the proposed merger.

CCI and Sony Pictures Networks India have not made any comments or statements so far about news reports.

The merger deal between Sony Pictures Networks India and Zee Entertainment was proposed by Zee Entertainment in September 2021, and received board approvals in December 2021. Both the companies are merging in order to create a rich and powerful media entertainment company in India, which will go against market heavyweights such as Star TV owned by Walt Disney Co.