Zee, Sony India merge to create entertainment behemoth

The Indian entertainment sector saw a major consolidation move on Wednesday with the merger of Sony Pictures Networks India Pvt Ltd (SPNI) and Zee Entertainment Enterprises Ltd (ZEEL). The two have signed definitive agreements to merge ZEEL with and into SPNI, and combine their linear networks, digital assets, production operations and programme libraries.

In a submission to the Bombay Stock Exchange (BSE), where it is listed, ZEEL said the agreements follow the conclusion of an exclusive negotiation period during which ZEEL and SPNI conducted mutual due diligence. After closing, the new combined company will be publicly listed in India. The closing of the transaction is subject to certain customary closing conditions, including regulatory, shareholder, and third-party approvals.

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Under the deal, SPNI will hold a majority stake of 50.86% in the merged entity. While ZEEL promoters will hold 3.99%, other ZEE shareholders will hold the balance 45.15%. The merged entity is poised to become one of India’s largest entertainment networks.

Punit Goenka of ZEEL will be the Managing Director and Chief Executive Officer of the merged entity. In line with its majority stake, the Sony Group will nominate the majority of the board of directors of the combined firm. This will include current SPNI MD and CEO, NP Singh.

Post deal, Singh will assume a broader executive position at Sony Pictures Entertainment Inc (SPE) as Chairman, Sony Pictures India (a division of SPE), said the BSE release. He will report to Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development. SPNI is an indirect subsidiary of SPE.

Merger of assets

Following the deal, ZEEL and SPNI will merge their film assets, television channels and streaming platforms. Hence, popular channels such as Sony MAX and Zee TV, as well as streaming platforms ZEE5 and SonyLIV will now come under the same umbrella.

“Two leading media and entertainment companies join hands to drive the next era of entertainment filled with immense opportunities,” said Goenka in the BSE statement. “The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms.”

Per the term sheet, SPNI will have a cash balance of $1.5 billion, which will come in through the infusion by the current shareholders of SPNI and the promoters (founders) of ZEEL. This will be deployed in the combined entity to drive sharper content creation across platforms, strengthen digital operations, bid for sports media rights and expand into new entertainment segments.

“The combination of ZEEL and SPNI is expected to achieve business synergies and, given their relative strengths in scripted, factual and sports programming, respective distribution footprints across India and iconic entertainment brands, the combined company should be well-positioned to meet the growing consumer demand for premium content across entertainment touchpoints and platforms,” said ZEEL.