'Capital infusion by Sony will allow us to invest in premium content including sports'

ZEEL MD & CEO Goenka, said that the proposed merger with Sony Pictures Networks India (SPNI) is in the final stages of stitching up

e4m by exchange4media Staff
Published: Nov 24, 2021 8:47 AM  | 6 min read
Punit Goenka

The growth capital infusion of $1.57 billion by Sony Pictures Networks India (SPNI) into the Zee-Sony merged entity will allow the company to invest in premium content including sports, ZEEL MD & CEO Punit Goenka said during a media event on Tuesday. Goenka said that the Zee-Sony joint entity will be the largest in the media & entertainment (M&E) sector and that the proposed merger with Sony Pictures Networks India (SPNI), is in the final stages of stitching up. 

"Zee and Sony will form the largest media and entertainment player in the country. Our revenue on a standalone basis will be close to $2 billion and the growth capital that Sony is going to infuse in the merged entity will give us the opportunity to invest in premium content including sports. There is a going to be a huge opportunity on both digital and linear side to create big scale entertainment properties and acquire large IPs across genres," he stated.

While sports will become a focus area for Zee-Sony, the decision on bidding or not bidding and at what price will be taken by the board of the merged company, Goenka noted. He also believes that the opportunity for the merged entity is great because the digital landscape has opened up new opportunities for monetisation which did not exist five years ago.

The ZEEL chief also said that consolidation is going to benefit the M&E industry in the long run while adding that the competition in the sector has been intense for the last 30 years. "I believe this (Zee-Sony deal) is another step towards Zee 4.0 transformation journey that I took on last year and I hope that we will be able to generate significant value for the stakeholders which includes not just our shareholders but our employees and customers as well," he added. Both the companies, ZEE and SPN, had announced a merger in September of their India businesses with Sony holding the majority stake. As per the non-binding agreement signed in September, of the total, about 53% of the merged entity would be owned by Sony and the rest by ZEE's holders.

Responding to a question, Goenka said that the merged entity will focus on sports, however, ZEEL as a standalone entity is not looking at sports. In a lighter vein, he pointed out how the sports business is returning to ZEEL which it had sold to Sony five years ago.

"Zee on a standalone basis will not because we have just finished our non-compete with Sony on the sports side. While we will reconsider sports on a standalone basis but right now my focus is look on joint consolidated basis with Sony. A lot has changed since we exited the sports business and funnily so, we sold it to Sony, and it's coming full circle back home," he noted.

M&E landscape, Goenka said, is evolving globally with drastic changes in the way consumption and interaction with content is happening. This change is driven by the omnipresence of screens and the interactivity that you are seeing with the advent of technology, he added.

"Technology is making niche content a viable option which was not available in the linear or broadcasting space in the past. We are seeing an explosion in content choices and new formats such as user generated or podcast which we had not even heard of in the last five years atleast in India. The social integration and gamification of content is increasing the stickiness of content significantly," he elaborated.

Speaking about the trends in the market, Goenka believes that Augmented Reality (AR) could pave the way for offering immersive experience at a huge scale going forward. He also said that content consumption on both linear and digital will increase. "Both platforms will have a different way of storytelling and that will leapfrog the content game going forward. Content creators will have to find a fresh breed of people to deliver this."

He also pointed out that technology has completely changed the viewership experience and the relationship between the creator and consumer. He noted that the traditional distribution systems will continue to thrive but the digital distribution systems through the OTT platform will become more mainstream. He foresees the paid OTT subscriber jumping 5X to 200 million.

"We want ZEE5 to be an SVOD first platform. Currently, in India we have created 45-50 million paid subscribers. This number in the next five years, in our view, is going to  jump to 200 million+ which is a 5X jump and as in any other business our mantra has been to be the number 1 or be the challenger brand. That will be our goal here as well," he added.

Being an SVOD-first player will give ZEE5 the leverage to fight the competition going forward, Goenka asserted.

Data, Goenka said, will become important to create content which again comes from technology. "Earlier, we used to depend a lot more on qualitative data to create content but here the consumer is telling us directly as to what they like and what they don't like and that is another good filter and feedback into the content creation system."

While conceding that ZEEL has been late in focussing on technology, Goenka sounded confident that the company will catch up very quickly and give globally players a fight in this market just as it had done on the linear side in the past. "We have created a tech and innovation centre in Bengaluru which will transform this company from a pure content company to a content and tech company," he stated.

On the ZEE5 strategy, Goenka said that the company will focus on Indian languages and culture to drive scale. "We are an Indian content company and even after the merger we will remain an Indian content company. Our focus on ZEE5 will continue to be Indian content and Indian culture across languages that we will approach this business with vis-à-vis our competition."

ZEE5 will see a further step up in content investments due to the strong growth it has seen in India and globally. "We have seen great growth happening not just here in India but across the world where we have launched the ZEE5 platform, and we have seen growth happening quarter-on-quarter," Goenka added.

Goenka made these comments while speaking at Media Partners Asia's (MPA) APOS India Summit on Tuesday.

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