Sony Pictures and Zee close to forming a powerful merged company

In what could be a major defining development, two of the leading Indian content players – Sony Pictures Networks India Private Limited (SPN) and Zee Entertainment Enterprises Ltd (Zeel) – have signed an agreement to merge, which would help them better compete with the world’s largest streaming players.

Sony Pictures and Zee joining hands in India

Why is it a big deal?

• The two entities have signed agreements to merge Zee with and into Sony Pictures and combine their linear networks, digital assets, production operations and program libraries, as per the announcement.

• The agreements follow the conclusion of an exclusive negotiation period during which Zee and Sony Pictures conducted mutual due diligence. Interestingly, Sony Pictures had come close to signing this deal with Zee in 2019 too, but it did not come through that time.

• The closing of the transaction is subject to certain customary closing conditions, including regulatory, shareholder and third-party approvals.

• The combined company should be well-positioned to meet the growing consumer demand for premium content across entertainment touchpoints and platforms.

What would this mean to the Indian content ecosystem?

• India has one of the fastest-growing and also multi-layered content ecosystem. The diversity of consumer preferences and the multitude of languages makes it a complex market to conquer. With the merger, the combined company hopes “to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities”.

• After closing, the new combined company will be publicly listed in India.

• The combination of Zee and Sony Pictures is expected to help deliver premium content with a robust consumer experience across platforms and also help achieve business synergies. The two brands have been strong players in India with their relative strengths in scripted, factual and sports programming, respective distribution footprints across India and iconic entertainment brands.

• As reported in ET, the deal will create India’s second-largest entertainment network by revenue and spawn an entity with 75 TV channels, two video streaming services (Zee5 and Sony LIV), two film studios (Zee Studios and Sony Pictures Films India) and a digital content studio (Studio NXT), making it a formidable entity in the Indian media and entertainment space.

• The Star-Disney India entity leads in India, with Reliance Industries-controlled Viacom18 as the other strong player.

New leadership structure

• Punit Goenka will lead the combined company as its managing director and chief exec. 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 chief exec NP Singh.

• According to the announcement, on closing, Singh will assume a broader executive position at Sony Pictures Entertainment as chairman of Sony Pictures India (a division of Sony Pictures Entertainment). He will report to Ravi Ahuja, Sony Pictures Entertainment’s chairman of Global Television Studios and its corporate development operations.