In a deal that surprised many on the Dalal Street, Zee Entertainment will be merging with Sony Pictures India. Shares of Zee Entertainment gained 29% after the news of the two entertainment behemoths merging broke on September 22.
According to the new proposed deal, Zee stakeholders will be holding on to about 47.07% of the company while the remaining 52.93% will be held by Sony Pictures India stake holders. As part of the new deal, Zee Entertainment will receive an investment of $1.57 billion from Sony Pictures.
Zee and Sony have been household names when it comes to television entertainment in India. Both started its operations with a slew of television channels that focused on dramas, sports, and news. Over the course of years, both the entertainment conglomerate forayed into the OTT business and film production. While Zee Entertainment is an India-made brand, owned by the Essel Group, Sony Pictures India is the subsidiary of the multinational American company Sony Pictures.
The Facts of the Matter
In what could be considered as the deal of the deals, Zee Entertainment agreed to have a merger with Sony Pictures’ Indian subsidiary Sony Pictures Network India (SPNI). For the merger, Sony will infuse a fresh flow of funds in Zee Entertainment, which is being reported to be about $1.57 billion.
This will give Sony Pictures about 52.93% of ownership of the company while Zee Entertainment will own 47.07% of the company.
What the Sony Pictures India – Zee Entertainment Merger Means?
The merger of the two entertainment behemoths will straight away create the largest entertainment network in the country. Reportedly, the two companies after they are merged will garner about 26% of the viewership of the country.
The Reach of Sony and Zee in India
Reportedly, Sony Pictures, has 26 channels in India while Zee Entertainment has 49 channels. Interestingly enough, Zee has more reach with as many as 173 countries in its sleeves. Sony on the other hand reaches to 167 countries.
When it comes to sheer numbers, Zee reaches to about 1.3 billion people across the world with 600 million of the number coming from India. Meanwhile, Sony also reaches out to as many as 700 million Indians.
After the merger, the people subscribing to Sony’s network, will be getting an access to Zee Entertainment’s content. This includes over 2,50,000 hours of content along with a film library comprising of 4,800 films (Hindi and Regional).
Sony’s Ace in the Hole Has been Sports Broadcast
With Sony, the company’s ace in the hole is its sports catalogue. Through its OTT service, and sports channels, Sony reached out to about 100 million viewers during the Border Gavaskar series, earlier this year. Since then, Sony broadcasted a slew of Test series, which includes India-New Zealand and India-England.
According to reports, Sony satiated the thirst of cricket of as many as 75 million viewers on its television channels.
Other than cricket, Sony network also reaches out to millions of Indians during WWE Main Events such as Raw and Smackdown. It also regularly broadcasts Ultimate Fighting Championship (UFC) matches. Recently, it received 69 million viewership during the first week of the Tokyo Olympics 2020.
According to reports, the next 90 days will be used by both the companies in due-diligence. After the deal is seen through, a new entity will emerge which will be a publicly listed company. After the news of the merger broke, shares of Zee Entertainment surged as high as 36%. At 2:51 PM IST, Zee Entertainment shares were being traded at Rs. 342.90 per share on the NSE.