Two years after it was proposed, the merger of media giants Zee and Sony appears to be on the tenterhooks. With recent statements issued by both companies, the industry is abuzz about whether the deal would go through or not.
Industry insiders believe that Reliance-Disney, the other merger in the works, as a merged entity could have a monopolistic approach if the Zee-Sony merger does not go through. They will have the largest market share, and could give a tough fight to other players, said the source.
Reliance and Disney as a merged unit are expected to have the biggest share of the TV advertising market at 43%. If theZee-Sony mergerhappens, their share is expected to be 25%. The emergence of these two behemoths would create a duopoly and change the landscape of TV entertainment in the country.
According to industry experts, if the Zee-Sony merger does not happen, it will be a big win for Reliance, particularly on the digital side as Jio Cinema is the market leader currently in terms of ad revenue scale.
“It’ll be a big win for Reliance, specifically on the digital side because Jio Cinema is the market leader now after acquiring IPL rights at least in terms of ad revenue scale. They've got the highest ad revenue number and viewership number compared to any other OTT platform in the country today. They will be able to compete and pressurise other platforms like Zee5, SonyLIV if the merger does not go through,” said Karan Taurani, Senior Vice President, Elara Capital.
Sharing a similar view, another expert, on the condition of anonymity, said that Reliance will have a bigger control over the OTT ecosystem but on the television side, the impact wouldn’t be much significant.
Zee on Sunday approached SPNI for an extension in the deadline to complete the proposed merger, which will create India's biggest media conglomerate.
Responding to the request to extend the December 21 deadline by Zee Entertainment to close the proposed merger, Sony on Tuesday issued a statement to the media stating that it has not yet agreed to a deadline extension adding that it is ready to discuss the issue.
A spokesperson of Sony Pictures Networks India said, “ZEE’s notice to the Bombay Stock Exchange and the National Stock Exchange of India dated December 17 is an acknowledgement that they will not be able to meet the December 21, 2023 deadline to close the SPNI/ZEE merger. The notice triggers an existing contractual provision in the deal that allows for both parties to discuss the possibility of extending the deadline. SPNI is required to start those conversations but has not yet agreed to a deadline extension. We look forward to hearing ZEE’s proposals and how they plan to complete the remaining critical closing conditions.”
Sony is reportedly objecting to a provision in the proposed deal that designates Punit Goenka as the CEO of the merged entity, citing concerns related to the ongoing Securities and Exchange Board of India (SEBI) investigation into a corporate governance case.
While Zee insists on adhering to the 2021 agreement, withPunit Goenkaleading the firm, Sony remains hesitant due to the SEBI investigation against Goenka, according to the report.
On August 14, SEBI had imposed a ban on Goenka from holding key managerial roles in ZEEL and its affiliates. The ban, related to allegations of facilitating fund movements out of ZEEL and their complex return transactions, falsely portraying ZEEL's receipt of dues, was lifted by the Securities Appellate Tribunal (SAT) on October 30. This clearance allowed Goenka to resume his role in the planned merger with Sony Group's Indian unit.
It was in December 2021 that Zee Entertainment Enterprises announced the merger with Culver Max Entertainment.
