ZEEL-Sony merger to create a TV broadcasting behemoth with 75 channels

The combined entity will have 25-30% share of the total TV viewership in India. In digital, it will have two fast-growing OTT platforms, ZEE5 and SonyLIV

e4m by Javed Farooqui
Published: Sep 22, 2021 2:55 PM  | 5 min read
Punit Goenka

The merger deal between Zee Entertainment Enterprises Limited (ZEEL) and Sony Pictures Networks India (SPNI) will be a win-win for both the parties. According to industry experts, the deal, if it fructifies after crossing all hurdles, will allow ZEEL's promoter family to fend off a challenge from Invesco, which is seeking to oust ZEEL MD and CEO Punit Goenka. Speculation is rife that Invesco might call off the Extraordinary General Meeting (EGM) that it has demanded to remove Goenka as the Director and appoint six new directors on the board.

The deal will also allow the ZEEL promoter family to retain its 3.99% shareholding in the merged Zee-Sony entity as a consideration for not competing with the merged company. Another big boost for the promoter family is the fact that Goenka will become the MD and CEO of the merged entity for five years, say the experts. 

After the merger, SPNI will hold a 52.93% stake in the entity, while ZEEL shareholders will keep the remaining 47.07% stake. ZEEL and SPNI had a combined topline of Rs 13,452 crore in FY21. The merging of two networks will create a TV broadcasting behemoth with 75 TV channels across general entertainment, movie, kids, sports, and regional genres. The combined entity will have a 25-30% share of the total TV viewership in India. In digital, it will have two fast-growing over the top (OTT) platforms, ZEE5 and SonyLIV, say the experts.

According to industry watchers, what makes the Zee-Sony deal lucrative is the fact that the two entities complement each other with minimum overlap in terms of audience, channels and viewership. ZEEL's strength is its wider pan-India footprint, particularly in rural India, whereas SPNI derives its strength from the urban market.

The merger allows both ZEEL and SPNI to fill in the white spaces in their respective portfolios. ZEEL doesn't have a presence in sports and kids genres, whereas SPNI is the second-biggest sports broadcaster in the country and has a kids channel called Sony Yay!. Likewise, SPNI doesn't have a presence in regional TV markets barring Marathi whereas ZEEL is among the top three players in markets like Marathi, Bangla, Tamil, Telugu, Malayalam, and Kannada. ZEEL is also a dominant player in Odia, Bhojpuri, and Punjabi markets, which are comparatively smaller but are significant markets, say these experts.

The biggest impact of Zee-Sony merger, according to industry sources, will be on the Hindi GEC and movie genres, which collectively control Rs 6,000-7,500 crore of total TV ad spends. Both ZEEL and SPNI have mainline Hindi GECs including Zee TV, &TV, Sony Entertainment Television (SET) and Sony Sab besides Sony Pal and Zee Anmol, which offer re-run content.

Zee TV is strong in rural HSM and fiction content, while SET has urban HSM as its key market and is a strong player in the non-fiction space. Likewise, Sony SAB is a unique channel as it offers more light-hearted shows which is conducive for family viewing and has a more urban appeal. &TV, the second GEC from ZEEL stable, caters to urban and rurban masses.

Experts feel in the Hindi movie genre, the Zee-Sony combine will be the dominant player, with an unrivalled viewership share that rivals will find impossible to match. ZEEL has nine SD and HD channels in Hindi movie space, while SPNI has three SD and HD channels. Zee Cinema and Sony Max collectively will lord over the genre with more than 50% share of the market. The Zee-Sony combine will also have the largest library of films across Hindi and regional languages.

According to the experts, the merged entity will also be a force to reckon with in the OTT space with two platforms, SonyLIV and ZEE5. ZEE5's global monthly active users (MAUs) increased to 80.2 million in June, compared to 72.6 million global MAUs in March. The global daily active users (DAUs) rose to 7.1 million from 6.1 million. Watch time per viewer per month increased to 190 minutes from 156 minutes. SonyLIV's MAUs jumped from 130 million to 200+ million+ in FY21. Total time spent saw a 25% jump to 75 minutes in FY21 from 60 minutes in FY20. Video views almost doubled to 4+ billion from 2 billion.

The two platforms are distinct in their content offering as well. ZEE5 has a strong focus on original content in Hindi plus regional languages, while SonyLIV's unique content offering includes Hindi originals, kids, sports, and Hollywood content. ZEE5 is strong in regional content, while SonyLIV doesn't have much of regional content. Similarly, SonyLIV has live sports and Hollywood, both areas where ZEE5 is virtually absent, say the experts.

Film and content production is another area where the merger will bring synergistic value. ZEEL has a separate movie division called Zee Studios, while SPNI has Sony Pictures Films India. ZEEL has been aggressively investing in movies to feed into its TV, OTT, and music businesses. SPNI has not been as aggressive in producing Hindi films, but it has a strong slate of international movies for distribution in India. Sony Pictures Films India is all set to premiere around 20 releases over the next one year.

ZEEL’s consolidated revenues for the year ended 31st March 2021 stood at Rs 7729.9 crore, compared to Rs 8129.9 crore in the previous year, a decline of 4.9%. The company's net profit was up 52% at Rs 800 crore from Rs 526.5 crore. Sony Pictures Networks India's (SPNI) consolidated revenue for the fiscal ended 31st March 2021 has dropped 4% to Rs 5721.6 crore from Rs 5961.1 crore in FY20. SPNI's consolidated net profit for the fiscal was down 35% to Rs 582.2 crore from Rs 895.5 crore.


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