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Zee and Sony Merger: A Game-Changer in India’s Entertainment Sector

In a landmark deal, media giants Zee Entertainment Enterprises and Sony Pictures Network India have merged to form India’s second-largest entertainment network. Under the agreement, Sony holds a majority stake, while the Zee family retains a 3.99% stake (with an option to increase it to 20% in the market).

The deal brings together:
75 TV channels
Two video streaming platforms – ZEE5 and Sony LIV
Two film studios – Zee Studios and Sony Pictures Films India
A digital content studio – Studio NXT

With this merger, India’s Technology, Media, and Telecommunications (TMT) industry is undergoing a significant transformation. The key takeaway for businesses and consumers is the need to stay updated on regulatory compliance as directed by governing bodies.

How is TMT Regulated in India?

The Role of TRAI

The Telecom Regulatory Authority of India (TRAI) is the primary governing body overseeing the TMT sector. TRAI was established to ensure fair regulation as private giants entered India’s technology sector.

Under the TRAI Act, 1997, its key responsibilities include:
Regulating the licensing process for service providers
Ensuring compliance with license terms and conditions
Managing spectrum allocation effectively
Setting quality standards for service providers
Conducting consumer protection surveys
Notifying tariff rates for telecom services

The key laws governing the TMT sector in India include:
The Information Technology Act, 2000
The TRAI Act, 1997
The Cable TV Networks Act, 1995
The Telegraph Act, 1885

Contemporary Developments at a Glance

1. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021

Cryptocurrency remains a hot topic in India. While tech-savvy investors push for legalization of private cryptocurrencies, the government seeks a middle ground through its 2021 Bill.

Objective: To create a framework for an official digital currency issued by the Reserve Bank of India (RBI)
Key Feature: Prohibits private cryptocurrencies but allows exceptions to promote blockchain technology

Concerns:
The concept of an “official digital currency” contradicts the decentralized nature of cryptocurrencies
The Bill proposes harsh penalties that seem disproportionate compared to other economic offenses
Although scheduled for discussion in December 2021, it was not introduced, leaving investors in limbo

For now, India remains hesitant to fully embrace cryptocurrencies. The fate of digital currencies in India remains uncertain, with speculation around how blockchain technology will be regulated.

2. TRAI’s Recommendations on OTT and Cloud Services

For Over-the-Top (OTT) Services

No immediate regulatory interventions required for privacy and security concerns
No need for a comprehensive regulatory framework at this stage
The market shall be monitored under existing laws, such as the IT Act, 2000 and CrPC, 1973

For Cloud Services

Cloud Service Providers (CSPs) will now fall under TRAI’s supervision for better consumer protection
The Department of Telecommunications (DoT) may create an industry body requiring mandatory CSP membership
Initially, only Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) providers will be regulated

These recommendations mark a significant step toward strengthening the digital ecosystem while balancing industry innovation.

3. The Information Technology Rules, 2021

In early 2021, the Ministry of Electronics and Information Technology (MEITY) & the Ministry of Information and Broadcasting (MIB) introduced the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 under the IT Act, 2000.

Objectives:
Self-regulation for social media and digital news platforms
New compliance requirements for Social Media Intermediaries (SMIs) and Significant Social Media Intermediaries (SSMIs)

Compliance Requirements for SMIs:

Publish privacy policies and user agreements
Remove objectionable content within 36 hours upon government or court orders
Provide requested user data to authorities within 72 hours
Appoint a Grievance Redress Officer to address complaints within 15 days

Additional Compliance for SSMIs:

Appoint a Chief Nodal Officer for legal compliance
Appoint a Resident Grievance Officer to handle complaints
Enable identification of the “first originator” of information (raising concerns about end-to-end encryption)
Publish physical addresses in India for communication
Maintain monthly compliance reports

Industry Backlash

Digital news publishers argue that these rules violate their freedom of speech under Article 19(1)(g) of the Indian Constitution
The News Broadcasting Association (NBA) believes the rules grant excessive executive control
The Supreme Court is yet to rule on the legality of these guidelines

The debate continues on how much control the government should have over digital platforms.

Astrea Legal Predictions for 2022

Data Protection Will Become a Priority: India may push for a “Data Tank” to safeguard national data from foreign entities.

Private Cryptocurrencies Unlikely to Be Legalized: The government’s digital currency will likely be the only recognized form, leaving private cryptos in a grey area.

Sustainable Electronics Will Gain Traction: Corporate giants will move toward environmentally friendly smartphones and gadgets.

Mental Health Apps Will Rise: Increased stress levels due to the pandemic will boost the digital mental health industry.

OTT Growth Will Impact Television Sales: With increased smartphone penetration, traditional television sales may decline.

Judicial Scrutiny on Media Control: Courts will likely step in to balance regulatory oversight with freedom of speech in digital media.

Final Thoughts

The Technology, Media, and Telecommunications (TMT) sector is evolving rapidly in India, with new regulatory developments, industry mergers, and emerging tech policies shaping the landscape. Stakeholders must stay informed and compliant with regulatory guidelines to navigate the sector effectively.

Disclaimer: This publication is for general informational purposes only and does not constitute legal advice.
Copyright © 2022 Astrea Legal Associates LLP

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