Development Hell: Merger Between Sony And Zee Delayed Once Again

India’s National Company Law Tribunal (NCLT) is reserving its order on the controversial merger plan between Sony’s India division and Zee Enterprises.

Sony’s local business is Culver Max Entertainment and has been planning a merger with Subhash Chandra-backed Zee Entertainment Enterprises (ZEEL). NCLT is pausing so that the two parties can make further submissions to the Tribunal.

Senior counsel Janak Dwarkadas representing ZEEL stated that non-creditor objectors in the matter, who are not even the company’s creditors, are holding the merger to ransom.

“Currently, 70 per cent of the equity is held by the public institutions, who are lenders, while about 25.88 per cent is held by public non-institutions, and merely 3.99 per cent is held by promoters,” argued Dwarkadas.

Dwarkadas’ reference to ‘the promotors’ is a reference to the Chandra family.

Development Hell: Merger Between Sony And Zee Delayed Once Again

India’s National Company Law Tribunal (NCLT) is reserving its order on the controversial merger plan between Sony’s India division and Zee Enterprises.

Sony’s local business is Culver Max Entertainment and has been planning a merger with Subhash Chandra-backed Zee Entertainment Enterprises (ZEEL). NCLT is pausing so that the two parties can make further submissions to the Tribunal.

Senior counsel Janak Dwarkadas representing ZEEL stated that non-creditor objectors in the matter, who are not even the company’s creditors, are holding the merger to ransom.

“Currently, 70 per cent of the equity is held by the public institutions, who are lenders, while about 25.88 per cent is held by public non-institutions, and merely 3.99 per cent is held by promoters,” argued Dwarkadas.

Dwarkadas’ reference to ‘the promotors’ is a reference to the Chandra family.

Zee And Sony Merger Expected To Be Completed By September

The anticipated merger between Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises Limited (ZEEL) is expected to be completed by the first half of the current fiscal year ending March 31, 2024, Sony Corp CEO Kenichiro Yoshida said during the company's annual corporate strategy meeting last week.

"By the end of the first half of this fiscal year, we are trying to complete the merger with ZEEL," Yoshida said, adding that the Indian media and entertainment (M&E) market is ripe for accelerated growth due to its large population and the creative talent that exists in the country.

"India has become the most populous country globally. There are so many growth opportunities in India, especially in entertainment. India is a creative country, and it has become the biggest producer of films since 2005," he said. Yoshida also noted that half of India's population is below the age of 30. This, he said, presents a huge opportunity in areas like anime and gaming. "There is great potential for growth in India in these areas," he added.

Apart from Yoshida, the meeting was also addressed by Sony president, COO, and CFO Hiroki Totoki; NP Singh, MD of SPNI, also gave a presentation on the opportunities in the Indian M&E market and the progress made by the company in its 2.5 decades of existence in the country.

Totoki noted that Sony began its journey in India with electronics and later expanded into entertainment. "Now, the proportion of entertainment is bigger than electronics in India. We feel that this is a compelling market," he said.

Zee/Sony Merger: Set To Close A Major Entertainment Channel And Auctioning Off A Further 3 Channels

ZEE Entertainment Enterprises Ltd is reportedly planning to shutdown a “major entertainment channel” as a part of concessions to merge with Sony Pictures Networks.

The plan has been considered to ease competition concerns and secure the Competition Commission of India’s (CCI) approval for their $10 billion merger.

LiveMint reports that the “major entertainment channel” currently has a huge 20-30% market share. Rumours surfacing online indicate that it could be one of the Marathi TV channels ran by ZEEL.

ZEE Entertainment Enterprises Limited (ZEEL) also offered to sell three Hindi TV channels, as per the remedial proposal to the competition authority, in its ongoing merger with Culver Max Entertainment (Sony).

The Competition Commission of India (CCI) said it will sufficiently address the competition-related concerns made in the proposal by ZEEL. The broadcasting giant said it would sell Hindi GEC Big Magic, along with ZEE Classic and ZEE Action.

“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.

Furthermore, the CCI order stated that 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)
4) the employees exclusively dedicated and working for these channels.

MultiChoice Bundles Two More Movie Channels To AddMovies

During the year, MultiChoice and M-Net ripped away fliekNET from DStv customers in South Africa and Namibia with the brand now reverted back to yearly pop-ups and kykNET now leading the pack with primetime movies.

AddMovies was introduced by September 2020 as M-Net was restructuring their movie offering for which was met with mixed to negative reviews primarily for those who were fans of M-Net Movies Premiere, M-Net Movies Action, M-Net Movies All-Stars and M-Net Movies Zone.

But thanks to the efforts of AddMovies they were able to keep the spark alive to even more households. Although, it will cost you extra which will be included in your monthly fees imagine bundling that with the Explora Ultra you're probably paying close to thousand.

Regardless AddMovies has seen a surge in subscribers but they're plenty of consumers who weren't as impressed with their selection of movies or at least the quantity of within the offering for which was lacking.

AddMovies initially started with 3 channels plus future popup channels or at least in the above mentioned regions but fliekNET didn't really have much impact as to why people got it in the first place and you can tell with the amount of rebroadcasts how miserable that channel was.

Honestly, fliekNET is better off as a pop-up or as seen with eExtra's Kuiertyd a block which airs at certain times of the week which is what I'm anticipating from kykNET's movie endeavours.

Anyways, MultiChoice seems to have added two of DStv Indian's current movie offerings SET Max and B4U Movies to the AddMovies family. Now I'm kind of curious as to what awaits from MultiChoice's next financial year.

Honestly, this just seems a bit much for AddMovies not that it's bad but the fact that one of them is stylised as the Bollywood version of M-Net Movies Premiere. Is it possible that maybe they'll hike it with the addition of these two?

All in all everyone but DStv Premium and Compact+ is a winner as Comedy Central, BET and MTV found their way to more households and Magic Showcase which is just MultiChoice's way of reinventing SABC will be rolling out in the coming month.

NCLT Directs Zee To Convene Shareholders Meeting On Its Merger With Sony On October 14

Passing an order, the Mumbai bench of the NCLT had on August 24 directed to call a meeting of the equity shareholders of Zee Entertainment to consider the merger, said a statement from the media major.

The National Company Law Tribunal has directed Zee-Entertainment Enterprises to convene a meeting of its shareholders to get approval for its proposed merger with Culver Max Entertainment, formerly Sony Pictures Network. Passing an order, the Mumbai bench of the NCLT had on August 24 directed to call a meeting of the equity shareholders of Zee Entertainment to consider the merger, said a statement from the media major.

"The NCLT Mumbai bench has directed in its order, that a meeting of the Equity Shareholders of Zee Entertainment Enterprises Ltd. be convened and held on Friday, 14th October 2022 for the purpose of considering, and if thought fit, approving the proposed merger of the Company with Culver Max Entertainment Pvt Ltd," said a company spokesperson.

The NCLT had directed to convene the shareholders' meeting virtually through video conferencing or other audio-visual means for approving the proposed scheme.

The merger, which will create the largest entertainment network in India with a 26 per cent viewership share, is presently before the scrutiny of the fair trade regulator CCI.

According to some media reports last week, the Competition Commission of India (CCI) made some observations about the merger.

Earlier in July, Zee Entertainment had said it has received approval from stock exchanges BSE and NSE for its proposed merger with Culver Max Entertainment.

Last year in December, the two media companies signed definitive agreements for the merger of ZEEL into Sony Pictures Network India (SPNI) following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence.

When the merger deal was announced in September last year, the two networks had stated that Sony would invest USD 1.575 billion and hold a 52.93 per cent stake in the merged entity and Zee the remaining 47.07 per cent.

After closing, the new combined company will be publicly listed in India.

Zee Is In Talks With CCI To Get Approval For Merger With Sony Entertainment

As per the BARC data for the ongoing financial year (2023), the merged entity has 36 per cent TV viewership market share in the Hindi GEC segment, and 33 per cent in the Hindi movies channels.

Zee Entertainment Enterprises has written to the Competition Commission of India (CCI) in order to get the latter’s permission to merge its operations with Sony Entertainment. The firm is citing the latest TV viewership data which shows that the merged entity would have lower market share and will not lead to any concentration of power.

Zee has submitted the TV viewership market share data for the financial year ending March 2022 and year-to-date data of the ongoing financial year (FY23). The data shows that the shares of four channels of the merged entity in has come down compared to the financial year ending March 2021 – the data used by the CCI to scrutinise the Zee-Sony merger.

According to data by Broadcast Audience Research Council (BARC) for the ongoing FY23, the merged entity has a 36 per cent market share in the Hindi GEC segment, and 33 per cent in the Hindi movies channels. In the Bangla GEC, the combined TV viewership market share is 38 percent and 26 percent in the Marathi GEC, as per an industry official.

In the entire fiscal year ending March 2022, the merged entity had a market share of 39 per cent in the Hindi general entertainment channel (GEC) segment and 38 per cent in Hindi films. In Bangla, the combined entity had a market share of 38 per cent and in Marathi, the combined entity had a market share of 31 per cent, according to BARC.

"There is no 40-per cent (market share) rule. It’s an indicative benchmark adopted by the CCI when assessing combinations. However, even where the combined market share is over 40 per cent, the CCI may ultimately decide to approve the transaction without remedies," said Abdullah Hussain, Partner, DSK Legal.

Some independent lawyers said if the merger is causing a concentration of over 40 per cent in the merged entity, then it becomes fit for scrutiny. The CCI approval for the Zee-Sony merger can go through if there are certain adjustments made to the transaction, including selling majority stake in the four channels by either Zee or Sony to get the approval, they said.

“The CCI will examine if the combined entity would reduce competition or if the other competitors could maintain sufficient pressure on the combined entity. If the combined market shares are very high and other competitors are not able to exert sufficient competitive pressure, the CCI may ask parties to give certain remedies (including divestitures) as a condition for approving the transaction. The CCI has asked parties for remedies in the past where the combined market share was as low as 30 per cent,” said Vaibhav Choukse, Partner & Head of Practice, Competition Law at JSA.

The lawyers also said the combined entity will have over 75 channels of different genres. “The CCI could ask the proposed combine to sell a part of the channels in those genres to another company to ensure there is no concentration in that market. The deal could go through if these adjustments are made," a Mumbai-based competition lawyer said.

Reuters reported that the CCI is probing the merger between Sony and Zee Entertainment saying it will potentially hurt competition by having "unparalleled bargaining power".