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India has approved the long-delayed merger of domestic broadcaster Zee and the local arm of Japan’s Sony, a deal that will create the country’s biggest media company and a rival to industry leader Disney.
The merged business will have more than 70 Indian TV channels, as well as film studios and extensive movie catalogues. It will extend Sony’s footprint in one of the world’s fastest-growing entertainment markets and present a formidable challenge to Disney Star, India’s largest TV network with more than 60 television channels.
Zee’s shares jumped 18 per cent on Thursday after it notified local stock exchanges that the National Company Law Tribunal had approved the merger. Sony will hold 50.86 per cent of the merged company, with Zee’s founders having a 3.99 per cent stake and the remainder held by other shareholders.
The deal, agreed in late 2021, has suffered several setbacks, including attempts by some of Zee’s creditors to put the company into insolvency.
There have also been regulatory hurdles. The Securities and Exchange Board of India this year banned Zee’s then-chief executive Punit Goenka, who was set to lead the combined group, from directing any listed company for a year for allegedly diverting funds. Goenka unsuccessfully appealed against the ruling.
The Sony-Zee merger comes as India’s once-fragmented media landscape coalesces into ever-larger groups.
“In the past few years you’re seeing more consolidation in television and more competition in digital,” said Mihir Shah, India head at Media Partners Asia, an advisory and consulting group. Shah estimated the combined annual revenues of Zee and Sony’s India unit at about $2bn.
But Sony and Zee will have to contend with the financial muscle of some of India’s most powerful tycoons.
Billionaire industrialists Mukesh Ambani and Gautam Adani are both building up media operations. Adani successfully completed a hostile takeover of news broadcaster NDTV last year, while Ambani’s JioCinema streaming service broadcast the wildly popular cricket Indian Premier League for free this year.
Sony had in 2021 earmarked a $1.5bn war chest for investment in the merged entity, and “the funding coming in post this merger is an opportunity to really scale on sports”, Shah said.
Both Sony and Zee “have good content, they are popular on television . . . Now how do they build a tech platform? The missing link is tech”, he added.
The companies tribunal did not immediately publish its full order, which may contain further details about steps Sony and Zee will need to take before they can merge. It is also unclear who will be appointed to lead the new company.
