CORPORATE

Sony-Zee merger to form India’s largest broadcaster with over 50% share in TV, streaming markets

Sony’s India entertainment unit will buy local rival Zee Entertainment Enterprises, merging TV channels, film assets and streaming platforms to become the largest broadcaster in the country and better compete with companies, like Netflix and Disney. 


The combined entity, nearly 53 per cent owned by Sony Pictures Networks India (SPNI), a unit of Japan’s Sony Group Corp, will own popular channels, such as Sony MAX and Zee TV and over-the-top platforms ZEE5 and SonyLIV, dominating the Indian TV and streaming market with over 50 per cent market share, analysts have said. 


The deal will also ease the pressure that Zee was facing from top shareholders who called for a management reshuffle last week – including the removal of CEO Punit Goenka from the board – amid corporate governance concerns.  


SPNI will invest $1.575 billion in the new entity, which will be publicly listed, the companies have said in a statement, without disclosing other financial terms. 


“This consolidation will create a positive impact for the broadcasting industry since it will help in boosting revenues of the existing players which was bit subdued on account of over-the-top (platforms),” Vivek Menon, the co-founder of debt fund NV Capital, has said. 


India’s broadcast industry is ripe for consolidation, especially after the deal between Sony and Viacom 18 fell through, Mr Menon adds, referring to scuppered merger plans between SPNI and a joint venture owned by billionaire Mukesh Ambani’s Reliance Industries’ Network18 and Viacom CBS. 


The two companies have signed an exclusive, non-binding term sheet to combine their assets and will conduct due diligence and finalise definitive agreements in 90 days and then present the merger proposal to shareholders. 


The majority of directors of the merged entity will be named by the Sony Group and Mr Goenka will become the merged entity’s managing director and CEO. 


A merger should improve management at Zee that had raised governance concerns, Hetal Dalal, the chief operating officer at proxy advisory firm IiAS, has said. Ms Dalal has, however, said that investors will need more details about the deal before their concerns are quelled. 

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