A Reuters news report said the watchdog felt the Sony-Zee merger could hurt competition, and that more scrutiny was needed.
The competition watchdog, in its letter dated August 3, is reported to have raised the point that the combined entity will enjoy “unparalleled” bargaining power and can increase the prices of channels as well as earn higher profits.
The CCI is said to have considered market data from FY21, when the combined viewership share of ZEE and SPN channels in four genres — Hindi general entertainment channel (GEC), Hindi films, Bengali GEC, and Marathi GEC — was more than 40% in each market.
However, executives at the two companies are confident the questions are procedural and will have no impact on the merger.
A ZEE spokesperson said the company continues to take all required steps in accordance with the law to complete necessary approval processes for the proposed merger.
SPN did not respond to ET’s queries till press time Wednesday.
The companies informed the CCI earlier this month that they have lost market share in key markets, and they are facing growing global and local competition in the media and entertainment space.
The combined viewership share for the channels, which BARC India puts out every week, has fallen steadily in FY22, and so far this year.
As per BARC viewership data sourced from subscribers, in the Hindi GEC genre, the share of the two companies has shrunk from 49% in FY19 to 43% in FY21, and to 41% in FY22. In the current financial year (year to date FY23), the share is down to 36%.
Similarly, in the Hindi film genre, the FY22 and year-to-date FY23 shares stand at 38% and 33%, respectively.
In the Bengali GEC and Marathi GEC genres, the shares have fallen to 38% and 27%, respectively, during year-to-date FY23.
“A combined reading of the BARC data of the relevant period and the provisions of the Competition Act leads us to understand that the deal is not anti-competitive, nor does it require further antitrust scrutiny,” said a partner at a law firm specialising in mergers and acquisitions. “This deal, in fact, is a precedent for future consolidation in the industry and an example of how every merger cannot be treated as anti-competitive purely based on public perception.”
A person with direct knowledge of the developments told ET that the two companies have shared recent viewership data and other details with the CCI.
“The competition watchdog’s job is to scrutinise and stop anti-competitive mergers, and they have a set process. They asked for data from the previous financial year and sent queries. Both SPN and ZEE have shared the latest data, which clearly shows there is a fall in market share, as well as enough competition from regional, national and international players,” said the person. “The two companies are in regular ongoing dialogue with the authorities and are providing all the information requested.”
