How The Arranged Marriage Between Zee And Sony Could Pan Out?
Business Today|January 23, 2022
Circumstances broker a coupling of Zee and Sony, two companies with distinctly different cultures and strengths. As they unite for a new future, they still face several hurdles, including an upset Invesco, Zee’s largest investor, and their own contradictions. The real challenge for the new mates has only just begun
Krishna Gopalan

IT HAS BEEN a busy 12 months for Punit Goenka. Sitting in his spacious room in Zee Entertainment Enterprises’ central Mumbai office, the relief on his face is palpable. He has just signed a deal to merge Zee, where Goenka is the MD & CEO, with Sony Pictures Networks India. Though the deal was in the making for over a year—as is normal in M&As—valuation was a contentious issue. With a combined revenue of $1.79 billion, this would be the second largest entertainment network after Star & Disney India, which has revenues of $1.8 billion, a shade more than the new entity. Importantly, the Zee-Sony entity will have 75 channels and a strong presence in entertainment, sports and regional markets, making it a serious player.

The sequence of events that led to the deal is quite apt for two companies that create content from such storylines for a living. The first move was made by Sony in November 2020, but that offer was not acceptable to Goenka. Things started moving about three months later when KPMG reached out to him on behalf of Sony with a better valuation. By August 2021, he was in the thick of it. “I was in London on holiday, but constantly on the phone with my team back here to thrash out the deal,” reveals Goenka. Why was Sony interested? N.P. Singh, MD & CEO of Sony Pictures Networks India, says his company wanted to expand its footprint. “For a while, we had discussed the possibility of doing something with Zee. Once we were clear, I took it to my bosses.”

The basic contours were agreed on, and a board meeting was scheduled for October. All hell broke loose when Invesco, the Atlanta-based investment management firm that holds an 18 per cent stake in Zee, accused it of corporate mis-governance. (Invesco did not respond to queries from Business Today.) Goenka and the promoters (Zee was started by his father, Subhash Chandra), with just 4 per cent stake, had limited say. “I told Sony about what was going on and left the decision to them,” he admits.

On September 22, Zee announced its plans to merge with Sony, and the deal was inked three months later. In the merged entity, Sony will hold a 50.86 per cent stake, while the promoters of Zee will hold 3.99 per cent. The remaining 45.15 per cent will be with Zee’s other shareholders. However, this is merely the beginning of what will be a long process: getting approvals at several levels; Zee having to deal with an angry Invesco, its largest shareholder; and the fact that both entities need each other in a challenging scenario, where growth is hard to come by.

A TALE OF TWO EMBATTLED FIRMS

Both the companies have been on a difficult wicket lately. Zee struggled with hard questions from Invesco, with Zee’s promoters having limited bargaining power (see Diminishing Stake). Plus, with a hefty debt (around ₹11,000 crore at the group holding company level), there was only so much Zee could do. A deal with Viacom18 was also considered but fell through. “Sony has come in as the white knight in this case,” says Vivek Menon, Managing Partner at NV Capital, a media and entertainment credit fund. To him, Goenka’s experience in broadcasting (he took over as MD & CEO in 2008) is useful, more so given that “he learnt the ropes from his father”.

Not all is well at Sony, too, here in India. Till 2017, the network had the broadcast rights to the Indian Premier League (IPL), the country’s marquee cricket tournament. Between FY15 and FY18, its revenue almost doubled from ₹3,342 crore to ₹6,277 crore, while net profit shot up 6x. But in September 2017, Star & Disney India (then Star India) bagged the IPL broadcasting rights, and Sony’s revenue stagnated (₹5,640 crore in FY21), while net profit dropped to ₹564 crore from ₹976 crore in FY20.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM BUSINESS TODAYView All

Delta Electronics - The Power House of Data Center Business in India

Deepak Singh Thakur, Business Head, CISBU-MCIS India & SAARC Region, Delta Electronics India Private Limited, a market leader in the industry, is set to chart a dynamic strategy in bringing about a paradigm shift in the digital space in India. He shares with BT the strength, scope and future of Delta's data centre vertical/segment addressing the digitization needs of the Indian market and expanding its market base with sustainability at the core in whatever the company does.

4 mins read
Business Today
June 12, 2022

Digital transformation is about to transform our society

Technology is no longer a matter of choice. It has now integrated into every aspect of our living. In India, the Covid-19induced lockdowns have really accelerated investments in digital initiatives. The impact of these investments and initiatives is now visible. India is now the world's second-fastest-digitising economy and becoming a global force to reckon with.

3 mins read
Business Today
June 12, 2022

NIGHT RIDER

UPSTART KIA TORE THROUGH THE DARKNESS SURROUNDING THE INDIAN AUTO INDUSTRY TO RACE TOWARDS THE TOP, LEAVING MORE CELEBRATED NAMES ROLLING IN THE DUST. CAN IT KEEP GOING?

8 mins read
Business Today
June 12, 2022

Building a culture of Inclusion, Diversity and Equity (IDE): KPMG in India

How important is diversity and inclusion for an organisation and how is KPMG in India, leveraging these aspects?

3 mins read
Business Today
June 12, 2022

Hammering It In

The Supreme Court’s observations on the GST Council’s recommendations could majorly upset the One India, One Tax regime

2 mins read
Business Today
June 12, 2022

A LIFE IN COLOUR

Picking a printer for home no longer means making a choice between great colour prints and low maintenance costs. Let us take a look at a few printers that manage to do both

3 mins read
Business Today
June 12, 2022

CROUCHING TIGER

THE UNASSUMING AMITABH CHAUDHRY HAS TAKEN ON AN AGGRESSIVE AVATAR, LEADING AXIS BANK TO HEIGHTS IT HAS NEVER REACHED BEFORE. A PEEK INTO HIS, AND THE BANK'S, REINCARNATION INTO A CHALLENGER OF INDIAN BANKING'S TOP GUNS

10+ mins read
Business Today
June 12, 2022

ARE YOU DATA RICH?

EVEN IF YOU ARE, LEVERAGING THE DATA MEANINGFULLY IS A DIFFERENT BALL GAME. GETTING THAT PART RIGHT IS KEY TO SUCCESS IN YOUR ORGANISATION'S DIGITAL TRANSFORMATION DRIVE

6 mins read
Business Today
June 12, 2022

'WE SPEND ₹5.000 CRORE ON SKILLING EVERY YEAR'

Rajeev Chandrasekhar, Minister of State for Electronics & Information Technology and Skill Development & Entrepreneurship, says the government is doing its bit for skilling, having trained 30 million people over the past five years, but industry needs to do more

9 mins read
Business Today
June 12, 2022

'I DON'T REMEMBER EVER WANTING TO DO ANYTHING BUT THE LAW'

Zia Mody, Co-founder and Managing Partner of AZB & Partners, explains why she chose the legal profession, why it is difficult for women lawyers, and her value system

10+ mins read
Business Today
June 12, 2022
RELATED STORIES

Legacy: The Importance of Family Unity

Leading any business is tough. Leading a family business can be considerably more difficult. Family business leaders have to deal with relationships and emotions that simply are not present in an ordinary business set-up. And this is in addition to the normal stresses of running a company. Under these circumstances, establishing or continuing a legacy for generations to come can seem like an impossible dream, says Trevor Dickinson.

6 mins read
Farmer's Weekly
April 08, 2022

Marketer Mantra

What are the marketing trends that will define 2022 for Africa? We asked some of the top CMOs – all women from a cross-section of industries – for their sterling views.

10+ mins read
Forbes Africa
April - May 2022

The Power of 2

Conventional wisdom says that starting a fast-growth business with your spouse is too risky, too intense, too fraught with potential drama. But these couples have turned their partnerships into their superpowers.

10+ mins read
Inc.
March - April 2022

Virus. Vaccines. And Vacillations

Vaccine mandates... and why everyone is talking about it.

10+ mins read
Forbes Africa
February - March 2022

All You Need Is Love

What I learned about creativity from working with the Beatles

8 mins read
Newsweek Europe
January 21, 2022

All You Need Is LOVE

What I learned about creativity from working with the Beatles

8 mins read
Newsweek
January 21, 2022

How to Go Public While Taking Care of Your People

"Chieh Huang started an e-commerce company in his garage and took it public in eight years. At every step, he prioritized his workers. His dream is to show future generations a “different way to do business.”

10 mins read
Entrepreneur
January - February 2022

When to Launch Something Illegal

Some business ideas are good enough to change the law. But you may never know unless you build it first.

3 mins read
Entrepreneur
January - February 2022

What to Do With ‘No'

“Never take no for an answer,” people say. But is that really true? We asked six founders: How do you know when to keep pushing and when to move on?

3 mins read
Entrepreneur
January - February 2022

The Never-Ending Launch

"Entrepreneurship is a marathon with no finish line. Are you exhausted? Henry Rose founder Michelle Pfeiffer knows exactly how you feel."

5 mins read
Entrepreneur
January - February 2022