Concessions offered by Sony-Zee as watchdog raises concerns

A unit of Sony Group and India’s Zee Entertainment have proposed offering concessions such as pricing discounts to help ease concerns of the country’s antitrust regulator over their merger, which will create a $10-billion TV behemoth, two sources told Reuters.

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Sony and Zee in December decided to merge their television channels, film assets and streaming platforms to create a powerhouse in a key media and entertainment growth market of 1.4 billion people, challenging rivals like Walt Disney Co (DIS.N).

The pair however received notice from the Competition Commission of India (CCI) last month, which argued the merged entity would have “humongous market position” and “unparalleled bargaining power”.The merged company is open to offering mandatory pricing incentives and discounts to all channel distributors for a certain period after the time. The pair have also proposed creating and operating “independent advertising verticals” for a certain period.

Three Indian antitrust lawyers familiar with the processes said such remedies by Sony-Zee will be part of ongoing negotiations between the companies and the watchdog. The latter will be free to accept or reject them, or ask for more concessions, they said.

“If the CCI is not convinced with the remedies, the matter will go to Phase II — a detailed investigation stage,” said Vaibhav Choukse, a competition law partner at India’s J. Sagar Associates, who is not involved in the matter.

Zee is a household TV name in India set up in 1992 by Subhash Chandra, dubbed the “Father of Indian Television”. Its founders had to dilute their stake in the Indian company to tackle debt in 2019 and the Sony deal was struck amid a 2021 boardroom conflict with an overseas shareholder.

For Sony, the merger will further its ambitions to tap more digital, TV and regional language audiences in the fast-growing Indian market, where international competitors also include the likes of Netflix and Amazon Prime Video.