The Competition Commission of India (CCI) in its detailed order on the merger deal between Culver Max Entertainment (Sony) and Zee Entertainment Enterprises Limited (ZEEL) has stated that the latter's remedial proposal of divesting three channels in the Hindi GEC and movie genres will sufficiently address the competition-related concerns.

As per the remedial proposal offered by ZEEL, the company will sell Hindi GEC Big Magic, which it had acquired from Reliance Broadcast Network, besides Hindi movie channels Zee Classic and Zee Action. The divestment will be made to an approved purchaser as a going concern.

"The Divestment Business consists of ZEEL’s and/or the Resultant Entity’s (as the case may be) ownership interest in Big Magic which is engaged in the Hindi GEC market segment and Zee Action and Zee Classic which are engaged in the Hindi Films channels market segment," the CCI order reads.

As per the latest BARC data supplied by Sony-Zee to the CCI, the market share of the combined entity is expected to fall to 30-35% in the Hindi GEC genre in FY23 (YTD) post the implementation of the remedy proposal from 35-40% (pre-remedy proposal). The combined entity will have channels like Sony Entertainment Television (SET), Zee TV, SAB TV, &TV, Sony Pal, and Zee Anmol in the Hindi GEC genre.

In the Hindi movie genre, the combined share of Sony-Zee is expected to remain unchanged at 30-35% in FY23 (YTD) despite the sale of Zee Classic and Zee Action. The Sony-Zee network will still have a strong presence in the Hindi movie genre through channels like Zee Cinema, Sony Max, &pictures, Sony Max 2, Sony Wah, Zee Bollywood, and Zee Anmol Cinema among others.

The CCI pointed out that the viewership share of Zee has been declining steadily in the Hindi GEC genre while that of Sony has remained stable. Likewise, it added that the viewership share of Sony in the Hindi movie genre has been steadily decreasing.

The decline in viewership of Sony and Zee channels in the two genres has resulted in a dip in the combined market share of the two entities. On the Marathi and Bengali GEC markets, the CCI noted that the incremental market share of the combined entity will be relatively smaller.

As per the CCI order, the divestment TV channels will include 1) license for trade-marks, channel names, and logos for a reasonable period agreed with the approved purchaser, 2) applicable licenses, permits, and authorisations, 3) applicable agreements concerning the licensing of content from the relevant licensor entity(ies); and 4) the employees exclusively dedicated and working for these channels.

As per the divestment roadmap laid out by the CCI, Sony-Zee will have to commit to entering into a final binding business transfer agreement to sell the channels within the First Divestiture Period. If Sony-Zee fails to enter into such an agreement at the end of the First Divestiture Period then they have to grant the Divestiture Agency, to be appointed by the CCI, an exclusive mandate to sell the three channels in the Second Divestiture Period.

Sony-Zee will also have to transfer the applicable content rights which are directly attributable to the Divestment TV Channels on the existing terms and conditions. The network will also have to ensure that the applicable TV content rights directly attributable to the Divestment TV Channels will remain intact to ensure continued economic viability, marketability, and competitiveness.

In the event the approved buyer is not a TV broadcaster, the Sony-Zee network will have to offer all the services which are customary and necessary for the operation of the divestment TV channels.

In over the top (OTT) segment, Sony and Zee have contended that the combined market share of SonyLIV and ZEE5 is less than 10% by monthly active users in FY21 compared to other major competitors.