Overlap in Hindi GEC & Movie to give more bargaining power to ZEE-Sony in ad deals?

Experts suggest the overlapping can be a game-changer for both the networks and the industry as advertisers can achieve high GRPs in a cost-efficient manner through 'combo-deals'

e4m by Sonam Saini
Published: Dec 27, 2021 9:39 AM  | 4 min read
Zee Sony

Zee Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India (SPNI) behemoth will lead to a colossal 75-channel entity across genres. But the two will face overlap and competition within the network, especially in Hindi General Entertainment Channel (GEC) and Hindi Movie genres. 

While ZEEL, with 49 channels, is known for its regional footprint apart from Hindi GEC and movies, SPNI, with 26 channels, has a strong presence in sports and other genres. Experts believe that the overlapping of Hindi GECs and Hindi movies can be a game-changer for both the networks and the industry. The merged entity will have pricing leverage in negotiating sales deals.

According to B. Sridhar, Group Director - Media Services, Innocean Worldwide Communication, this is where there is a great potential for the merged entity to gain from, even with a status quo of the content. "If there are meaningful sales synergies, it could become a single window for advertisers to deal with varying needs and obtain efficiency whatever the combination. This can indeed lead to greater ad revenue share for the network." 

Talking about the impact of this merger on some of the key genres, Sridhar noted that the Hindi GEC and Hindi Movies genres are where the game can change. Both Zee and Sony are strong in this space. "Advertisers can achieve high GRPs, translating to high reach for their brands in a cost-efficient manner, through 'combo-deals'."

According to Emkay Research, the merged company currently has a 27% market share (Sony has 9% market share and ZEEL has 18%), making it the largest broadcasting company in India. 

 

In genres like regional GEC and sports, Zee or Sony have either strong or no presence. "As a result, given the current scenario, it is good for an advertiser to engage with a single channel or network rather than a merged entity. But ultimately, this merger must be for definitive business growth through innovation across all influencing elements. Hence, only time will tell how much of a win-win deal would this be for viewers, advertisers, and the new media entity," said Sridhar. 

According to Emkay Research, this merger could be a win-win situation for both companies as it will strengthen the channel offerings and content portfolio.

"One of the most significant gaps in Zee's portfolio has been in the sports genre, a business that it sold to SPNI a few years ago. SPNI has meanwhile garnered a significant market share in the Hindi GEC and movie genres, which should support its overall viewership share. While this helps enhance the content portfolio, we do not expect significant consolidation in genres in which there is an overlap (Hindi GEC & movie), primarily due to both companies' diverse content offerings and the established brand identities of their channels." 

Experts also noted that a lot depends on the channel's performance. The merged entity will have 11 channels in Hindi GEC and 13 channels in Hindi movie genres, which could lead to the shutting down of a few channels depending on the performance.  

"Be it Sony or Zee, they will have to create compelling and salient content to ensure that significant viewership keeps coming their way. I believe that the combined market share, by way of viewership of Sony and Zee channels, will grow, at the most by 2-3%. It is not that other channels or networks will get swamped just because two entities have merged," said a senior media planner. 

As per the latest BARC India data for Week 50, Sun TV bagged leading positions across genres. Star Maa and Star Plus have taken second and third top slots, respectively. In the HSM, the top three channels were Star Plus, Star Utsav, and Colors. 

"Wherever the network has more than 50% share in the genre in terms of viewership share, they can have a positive impact in terms of pricing," said Karan Taurani, SVP, Elara Capital. 

As earlier reported by e4m, 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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