To secure approval for the $10 billion merger plan, Zee Entertainment Enterprises Ltd and Sony Pictures Networks India have offered fresh concessions, which include a proposal to shut down a major entertainment channel.
In a submission to the Competition Commission of India (CCI), Zee on Friday offered to shut down a major entertainment channel, that has around 20-30 per cent market share in the entertainment channel space to ease competition concerns, reported Livemint quoting two people aware of the development.
“Zee has agreed to shut one of its dominant entertainment channels. Removing the business of this channel from the scope of the merger will ensure that the merged entity’s overall market share is pruned in certain major regions. This may assure CCI that any monopolistic pricing power of the merged entity is curbed and the potential viewership dominance is kept under check,” one of the two people told Livemint.
The identity of Zee channel offered to shut down is not known yet.
The move comes as the CCI has expressed concern that Zee-Sony, India’s largest merger, may give the company unprecedented pricing power, which can hurt other TV channels in the entertainment broadcasting industry.
This is the first time Zee and Sony have offered a structural remedy, reported Livemint. Before this, the companies about a fortnight ago had submitted a set of “behavioural remedies” to the deal, which did not include structural changes, reported the newspaper.
“After a hearing before CCI on Thursday, Zee and Sony have submitted their “remedy” through the filing of a rejoinder on Friday (30 September) to the original merger application that was filed with CCI a few months ago,” the first person told Livemint.
Sony and Subhash Chandra’s Zee in December decided to merge their television channels, film assets, and streaming platforms to create a powerhouse in a key growth market of 1.4 billion people, that will challenge rivals like Walt Disney Co.
Except for the CCI, the two companies have secured approvals from the Securities and Exchange Board of India (Sebi), shareholders and the National Company Law Tribunal, Zee Entertainment and Culver Max Entertainment Pvt Ltd (formerly Sony Pictures Networks India) for the proposed merger.