ZEEL, Sony sign merger agreement

ZEEL, Sony sign merger agreement


By Administrator_India
Capital Sands 

NEW DELHI: Media and entertainment conglomerates Zee Entertainment Enterprises Ltd. (ZEEL) and Sony Pictures Networks India Pvt Ltd (SPNI) on Wednesday announced signing definitive agreements to merge ZEEL with and into SPNI and combine their linear networks, digital assets, production operations and programme libraries.

The agreements follow the conclusion of a negotiation period during which ZEEL and SPNI conducted mutual due diligence, the two companies said in a statement to the stock exchanges.

After closing, the new combined company will be publicly listed in India. The closing of the transaction is subject to certain customary closing conditions, including regulatory, shareholder, and third-party approvals.

Punit Goenka will lead the combined company as its managing director and CEO. The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPNI managing director and CEO, N.P. Singh. On closing, Singh will assume a broader executive position at SPE as chairman, Sony Pictures India (a division of SPE) reporting to Ravi Ahuja, SPE’s chairman of Global Television Studios and SPE corporate development.

To be sure, Zee’s founding family had been embroiled in a bitter battle with Invesco, its largest shareholder for the past three months, which had approached a division bench of the Bombay high court to challenge an earlier order that restrained the US fund manager from calling a special shareholders’ meet to remove managing director Punit Goenka and reconstitute the Zee board. Zee had challenged Invesco’s attempt to restructure the board in courts and alleged that the US investor is trying to take over India’s largest publicly-traded broadcaster at the behest of another company.

“It is a significant milestone for all of us, as two leading media & entertainment companies join hands to drive the next era of entertainment filled with immense opportunities. The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms,” Goenka said in a statement.

Media experts see the combined entity that will own 75 television channels, two video streaming services, two film studios and a digital content studio, emerging as a formidable player.

Karan Taurani, senior vice-president, Elara Capital Ltd said the merger will result in favourable cost synergies for the television business, with increased profitability and good content offering on the digital front with variety of options now available on ZEE5 and SonyLIV, the OTT platforms owned by the two companies.

“The negative impact of NTO 2.0 (the new tariff order brought in by the Telecom Regulatory Authority of India) will be relatively subdued for ZEEL-Sony as an entity as they can efficiently bundle their best channels, thus enjoying an edge over competition,”

He estimates that together the ZEEL-Sony entity would command 22% of the advertising revenue market and would become a dominant force in the broadcast industry along with the Star network. Projecting their consolidated digital business to touch Rs. 91 billion by FY2024, Taurani said there is potential for these revenues to expand as a big shift to SVoD (subscription video-on-demand) is likely to emerge in the coming years.

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