Analysis – Sony-Zee’s $10 billion media game could face changes and delays in India’s antitrust scrutiny.

An initial review by India’s Competition Commission (ICC) has raised concerns, Reuters reports, arguing that the group would have « unequal bargaining power » with Zee’s 92 chains paired with $86 billion in revenue worldwide from Sony.

The CCI called for further investigation, pointing to the impact on competition due to the « strong » market position the merged entity would have on the channels’ advertising and pricing, particularly in the popular language segment. Hindi.

Zee shares fell 6% in trading on Thursday, a day after Reuters reported the ICC’s assessment of the merger.

Zee did not respond to questions for this article, but said she continues to take all necessary legal steps to obtain ICC approval.

Sony did not respond to Reuters requests for comment.

Ashok Chawla, a former chairman of the CCI, told Reuters that such a review could lead to a detailed analysis of the merger involving a review of the various broadcast offers, which would delay approval.

Four antitrust lawyers told Reuters that such a notice signaled the ICC’s deep concerns and was likely to force Sony and Zee to rethink their proposed structure, although none said it was likely to lead to the collapse of the agreement.

Any potential delay, however, comes at a bad time for Zee, a household name in Indian television, established in 1992 by Subhash Chandra, dubbed the « Father of Indian Television ».

Zee’s founders had to dilute their stake in the Indian company to cope with their level of debt in 2019 and the deal with Sony was struck amid a board dispute with an overseas shareholder in 2021.

For Sony, the merger will bolster its ambitions to further tap into digital, TV and regional language audiences in the rapidly growing Indian market of 1.4 billion people.

Lawyers said Sony and Zee may have to offer a « structural » remedy, which could involve the sale of certain channels, and « behavioural » remedies such as a commitment not to raise prices for advertisers for a certain period of time. .

« They may have to get rid of some strings by selling them … to third parties. This is the ICC’s preferred remedy to reduce the threat to competition, » said Shweta Dubey, partner at the Indian law firm. SD Partners and former official of the M&A division of the CCI.

« The whole approval process will be significantly delayed now, and will depend on how the proposed changes are acceptable to the ICC and how the companies negotiate. »


The proposed remedies are likely to be « substantial », a source with direct knowledge of antitrust concerns over the merger plan said, without giving further details.

In 13 years of ICC history, 22 transactions had to be modified to obtain approval. In 2015, for example, when Indian multiplex giant PVR Ltd sought to acquire the business of a smaller rival, the watchdog raised concerns, forcing it to commit to selling some cinemas and giving assurances of not develop in certain regions.

The ICC has given Sony and Zee 30 days from August 3 to respond to its notice, but they have yet to submit their responses, said a second source with direct knowledge of the process.

Analysts said the combined entity would reshape India’s media and entertainment landscape, heating up competition with Netflix, Amazon and Walt Disney and with Indian billionaire Mukesh Ambani’s Viacom18 joint venture with Paramount Global.

Media companies are not only betting on television channels, but also on their video streaming platforms and sports rights.

This week, Zee took another big step, reaching a licensing deal with Disney to buy certain cricket television rights, which IIFL Securities estimates at $1.5 billion.

In a research note, the brokerage said those payments should have been made in part by fresh funds Sony planned to inject into the merged entity and signaled concerns about any antitrust delays.

« The biggest risk … is that the merger does not go through and that Zee will have to bear high content costs, » IIFL said.

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