The fate of the $8.5 billion Walt Disney-owned Star India and Reliance Industries' Viacom18 hangs in the balance as the NCLT (National Company Law Tribunal) prepares to deliver its verdict on August 1. While the deal promises to create a media behemoth, legal experts caution that several hurdles remain.

The Star-Viacom18 merger, if approved, will reshape the Indian media landscape, combining the strengths of both networks. However, securing clearance from regulatory bodies like the Competition Commission of India (CCI) is crucial. The CCI has already raised concerns and is seeking answers to over 100 queries.

Legal experts believe that the success of the merger hinges on addressing regulatory concerns and ensuring a smooth transition. While the potential benefits are immense, the complexities involved in such a large-scale deal cannot be overlooked.

According to Kunal Mehra, Partner, DSK Legal, listing for final hearing means that the Scheme has already cleared the first hurdle of obtaining approvals of the requisite majority of shareholders and creditors of all the companies.

Notices of the final hearing would have been sent to all the regulatory authorities including the concerned Regional Director, the Registrar of Companies, the tax authorities, the CCI, the Ministry of Information and Broadcasting (MIB), etc. with a clear stipulation that if they do not respond within 30 days of receipt of such notice, it will be presumed that they have no representations/objections to the Scheme.

“The NCLT will consider the representations/objections filed by the regulatory authorities and companies’ responses/submissions in relation thereto. The Scheme is subject to CCI’s approval and as per recent media reports, the CCI has sought responses to nearly 100 queries from the parties. It is unlikely that the CCI clearance may come before the next date of hearing,” Mehra explained.

In any event, obtaining CCI’s clearance would presumably be listed as one of the conditions for the effectiveness of the Scheme.

“Taking a holistic view of the matter, the NCLT will either approve the Scheme or grant further time to all concerned to file their representations and list the matter on another date, " Mehra added.

Even if the NCLT grants its approval, the Scheme cannot be implemented unless all regulatory clearances, including those from the CCI, MIB, and others, are secured.

While the deal appears promising, experts caution that the complexities of such large-scale mergers cannot be underestimated.

“While everything seems to be heading in the right direction, the entities should also take note of the recent collapse of the $10 billion proposed merger between Sony Group and Zee Entertainment, stemming from certain mutually agreed terms not being met,” said Paritosh Dhawan, Principal & Founder, Dhawan and Co.

“While the Ambani-owned conglomerate assures that the merger does not pose any danger to the competition landscape in India, the shockwaves that it has sent are too grand to not notice. The finest strategy that can be put into play at the moment is for the entities to move even more cautiously in consonance with the rising stakes and hope that neither hides any skeletons in the closet,” he added.