Zee, Sony form India's largest entertainment network
The merged entity will have almost 28 percent of the entertainment viewership in India, followed by Star India's 24 percent.
Zee Entertainment Enterprise (ZEE) joined hands with Sony Pictures Network India (SPNI) on Wednesday, which makes the merged entity the largest network in India.
SPNI will invest $1.575 billion of growth capital for 52.93 percent of the merged entity, with ZEE holding the balance 47.07 percent. Punit Goenka will continue as Managing Director and CEO, according to ZEE's stock exchange filing.
The combined entity will have around 28 percent of the entertainment viewership in India, compared to Star India, which is at 24 percent, according to Abneesh Roy, Executive Vice President (Research) at stock brokerage Edelweiss Securities.
Digital assets, production operations, programme libraries and linear network will be combined after the due diligence conducted by both parties in the period of 90 days, according to the exchange filing.
“The combined company would be a publicly listed company in India, and be better positioned to lead the consumer transition from traditional pay TV into the digital future,” Sony Pictures said in a statement.
Zee Entertainment, which also owns over-the-top entertainment platform Zee5, has 260,000 hours of television content and 4,800 movie titles under its name. But even then, its OTT platform is unable to compete with biggies including Disney+ Hotstar and Netflix.
“Currently, Zee doesn’t have sports and Sony does. Sports is very important when it comes to capturing the OTT market. Sony’s Sports and reality show library will help Zee in strengthening its position in the digital market,” said Roy of Edelweiss Securities.
In 2019, Hotstar drew in 267 million viewers on its platform on the back of Indian Premier League (IPL).
The deal, which brings in cash infusion of US$1.57 billion from Sony Pictures, will also help the firm build a larger digital playbook with Sony’s LIV app.
Television networks have been facing financial issues ever since cord-cutting became mainstream. The trend started in the US due to the emergence of Netflix, which was providing high-quality content that viewers can watch any time by paying a subscription fee. And during the pandemic the trend reached India.
With no shows being produced for TV, due to strict lockdown restrictions, OTT adoption got accelerated. Many went online to get entertained. AltBalaji, which majorly caters to the mass audience residing beyond metro cities, saw a 35 percent quarter-on-quarter jump in its viewership, while other platforms would have also seen increased traffic.
Disney’s OTT platform Disney+ Hotstar usually has an upper hand due to having rights for the Indian Premier League (IPL). But during the pandemic, its vast content library consisting of Disney’s original shows, Marvel movies, and HBO shows came in handy to cash in on the increasing OTT demand.
The maker of hit show Mandelorian spent a massive US$ 71.3 billion in 2019 to purchase 21st Century Fox’s TV assets to expand its content library and compete with the likes of Netflix and Apple TV+.
Zee and Sony’s merger is in line with the global trend, and is being welcomed by investors. ZEE’s share price on stock markets have boomed 24-25 percent since the merger news broke earlier today.
“This is a positive and welcome move. After the merger talks of Sony Entertainment with Viacom18 dropping, this consolidation will add synergies to the existing portfolio of both the entities. Further, ZEE would also have access to Sony”s international catalogue to exploit and monetise,” said Vivek Menon, Co-founder of NV Capital, which is a SEBI-approved alternative investment fund backing entertainment startups, and content creators, among others.
Edited by Kunal Talgeri