A Reuters news report said the watchdog felt the Sony Z merger could harm competition, and that more scrutiny was needed.
The competition watchdog, in its August 3 letter, is said to have raised the point that the merged entity will have “unparalleled” bargaining power and can increase channel prices as well as generate higher profits.
CCI is said to have looked at market data from fiscal year 21, when the combined viewership of ZEE and SPN channels in four genres – India’s General Entertainment Channel (GEC), Hindi Movies, Bengali GEC, and Marathi GEC – was more than 40% in every market.
However, executives at the two companies are confident the questions are procedural and will have no bearing on the merger.
A ZEE spokesperson said the company continues to take all steps required by law to complete the necessary approval processes for the proposed merger.
SPN had not responded to ET inquiries as of press time Wednesday.
The companies told CCI earlier this month that they have lost market share in key markets, and that they face increasing global and domestic competition in the media and entertainment space.
The combined viewership of the channels, which BARC India shows every week, has been steadily declining in fiscal year 22, and so far this year.
According to BARC viewing data taken from subscribers, in the Indian GEC type, the share of the two companies has shrunk from 49% in FY19 to 43% in FY21, and to 41% in FY22. In the current fiscal year (YTD in FY22) 23), the share fell to 36%.
Similarly, in the Hindi film genre, the shares of FY22 and FY23 to date are 38% and 33%, respectively.
In the Bengali GEC and Marathi GEC types, the shares have fallen to 38% and 27% respectively during the 23 fiscal year to date.
Said one partner in a law firm that specializes in mergers and acquisitions. “This deal is, in fact, a precedent for future consolidation in the industry and an example of how not every merger can be treated as anti-competitive based solely on public perception.”
Someone with direct knowledge of the developments told ET that the two companies had shared recent viewing data and other details with CCI.
The task of the competition controller is to scrutinize and discontinue anti-competitive mergers, and they have a defined process. They requested data from the previous fiscal year and sent inquiries. SPN and ZEE have shared the latest data, which clearly shows that there is a declining market share, as well as sufficient competition from regional, national and international players,” the person said. “The two companies are in regular ongoing dialogue with the authorities and provide all required information.”