Zee-Sony entity to generate close to $2 billion in revenue

Mumbai: Zee Entertainment Enterprises Ltd (Zeel) on 22 September announced its plans for a merger with Sony Pictures Networks India (SPNI). The merged entity will be the largest media and entertainment player in India with a scale close to $ two billion in revenue.

In an investor call on Wednesday, Punit Goenka, who has been proposed as the managing director and chief executive officer of the merged entity for a period of five years, stated that “the primary objective will be growth for the company overall. Whether that will be for the digital or sports business that the new board of the merged company will decide,” according to a report by Moneycontrol.

The merger was unanimously approved by the Zeel Board in a meeting held on Tuesday, where it evaluated the agreement on the financial parameters as well as the strategic value which SPNI brings to the table.

“Condition for my appointment is the same as what has already been approved by the shareholders. There is no change to that. Any change in remuneration would be subject to board approval,” said Goenka.

The companies have inked a non-binding term sheet that gives them 90 days to conduct mutual due diligence and come to an agreement that will also require shareholder approval. Post that the scheme will be presented to National Company Law Tribunal (NCLT) and Securities and Exchange Board of India (SEBI). Zeel noted that the Competition Commission of India (CCI) approval is also part of the process.

According to Goenka, while CCI norms are different for different sectors, in this scenario, it will be a national-level evaluation and not a state-level evaluation. “The deal has been arrived at with Sony after months of negotiation and preparation. And I think we have a formidable real deal on the table today.”

Sony has agreed to infuse $1.6 billion cash which will enable the merged entity to accelerate its digital platform and significantly invest in premium content including sports. Zeel had sold the Ten Sports franchise to Sony five years ago which will now become a part of the merged entity.

On the matter of channel rationalisation, Goenka said that it will happen at a later date as each channel has its own unique viewership as well as programming. “The focus will be on maximising reach and viewership. Overlaps are there in Hindi-speaking markets of GEC and movies. But the content that exists on the platforms is unique and exclusive. So, the objective will be to maximise viewership and garner revenue rather than shutting down channels," he added.

The company has yet to reach out to shareholders like Invesco and LIC on the proposed transaction with Sony.

In an annual general meeting (AGM) held on September 13, the largest shareholder of Zeel, Invesco Developing Markets Fund and OFI Global China Fund IIC, holding 18 per cent stake in the media company, called an extraordinary general meeting of the shareholders seeking to remove Punit Goenka, the sitting MD, and two more independent directors from the board of the company. The two independent directors Ashok Kurein and Manish Chokhani had submitted their resignations a day prior. The funds sought the appointment of their own six nominees on the board of Zeel.

Zeel’s promoters had pared their stake in the company to four per cent to pay off debt worth Rs 13,000 crore.