The fallout of the much-anticipated mega merger of Zee Entertainment Enterprises Ltd (ZEEL) and Culver Max Entertainment Pvt Ltd (Sony), which was all set to shake up the television landscape of India, has left everyone asking the big question - what will this mean for India’s media and entertainment industry?

According to industry analysts, consolidation is the only way forward to survive in the industry and remain profitable. Thetermination of the mergerwill not only hurt both the parties but impact the whole broadcast sector in the long run, considering there are tech heavy weights like Google India and Meta in the space for competition.

In the Indian M&E sector, the top 14 media giants collectively contribute Rs 1.11 trillion. The combined revenue of Google India and Meta stood at Rs 43,308 crore in FY2023, which is higher than the combined revenue of the next four top media companies, Disney Star, ZEEL, Times Group and Sony, amounting to Rs 42,628 crore.

Ashish Bhasin, Founder of The Bhasin Consulting Group, had said that given the possibility of consolidation of two extremely powerful competitors (Disney- RIL), the Zee-Sony merger would have been beneficial to both the broadcasters and the industry.

“If Zee and Sony had merged, the market would have seen two big players. However, consolidation has begun, and it will only gain momentum over time. It would have benefited both Sony and ZEE had they been able to work together. However, there is still the prospect of combining later on, either willingly or by acquisition of shares, or by any other means,” said Bhasin.

If the merger had gone through, the combined value of ZEEL and Sony would have been Rs 14,771 crore. The merged companies would have owned over 70 TV channels, two video streaming platforms (ZEE5 and Sony LIV) and film studios (ZEE Studios and Sony Pictures Films India) with a market share of 26%.

The Zee-Sony merger may not have seen the day of light, but another big merger is still in the pipeline which is likely to own a bigger ad pie. All eyes are on the Disney Star’s acquisition by powerhouse Reliance India (owner of Viacom18). The value of the combined Disney Star-Viacom18 entity will be Rs 24,411 crore, and according to industry experts, while Disney Star has 32% share in the ad market, Viacom18 has 11% ad market share. The merged entity will have 43% ad market share with over 100 TV channels, two streaming platforms and two film studios.Currently, Disney Star owns over 70 TV channels in eight languages, a streaming platform Disney+ Hotstar and a film studio, whereas Reliance’s broadcast division Viacom18 owns 38 TV channels in eight languages, a digital streaming platform - Jio Cinema - and a film studio Viacom18 Studios.

Speculations are that the termination of the Zee-Sony merger is likely to give Disney Star-Reliance merged entity a monopoly with no big player in sight to compete with it. According to Elara Capital’s Senior VP Karan Taurani, there is a scarcity of players in the media and entertainment industry at the moment for coming together with Zee.

“There is a scarcity of players in the market. RIL and Disney are already in talks, and we don’t foresee any small local player acquiring ZEEL. If at all, there could be some financial or strategic partnership. Disney and Viacom will have monopoly,” said Taurani.

Given the current scenario of the broadcast industry, it looks like a game of musical chairs and which player will tango with whom, only time will tell, said Nitin Menon, co-founder and managing partner, NV Capital.

“We will have to see how it pans out; whether a new player enters the industry or existing players will merge. In totality, those who strike a perfect balance between linear and non-linear TV as well as show control over the bottom line will be in pole position to dominate the market in the future.”