NEW DELHI: Zee Entertainment has agreed to sell three of its entertainment channels -- Big Magic, Zee Action and Zee Classic – to address the anti-competition concerns raised by the anti-trust regulator before approving its merger deal with Sony India (now renamed as Culver Max Entertainment).
This has been revealed in the copy of the order (approving the deal) released by the Competition Commission of India (CCI). The CCI had flagged its concerns over the dominant market position the merged entity would have with regard to advertising and channel pricing, particularly in the popular Hindi language segment. After the CCI raised its concerns, Zee agreed to modify the deal.
As per the modified deal, Zee has to sell three of its general Hindi entertainment channels so as to ensure that the merged entity does not have a strong market position to be able to increase the price of advertisers, distribution platforms and viewers. CCI also bars Zee from selling the said channels to Star India or Viacom18 Media. This is to ensure that the sale should not ‘create any prima facie competition concerns’.
The purchaser(s) of the three channels should not be either a past or present employee or director (or spouse or child of such employee or director). As per CCI condition, the purchase should have financial resources, expertise and incentive to maintain and develop the three channels as a viable and active competitor to the merged entity of Zee-Sony in relevant markets.
The new entity formed by the merger of Zee and Sony has also been barred from taking a stake in the said channels for at least five years from the time of the sale. According to CCI, the merged entity had a market share of 40-45% in the general Hindi entertainment segment before the modification of the deal. However, post-modification, the market share would be 35-40%.
Zee to modify Sony deal
CCI had flagged its concerns over the dominant market position the merged entity will have with regard to advertising and channel pricing in the Hindi segment. After CCI raised its concerns, Zee agreed to modify the deal