Sony Pictures Networks India Private Limited and Zee Entertainment Enterprises Ltd. on Wednesday announced that they have signed definitive agreements to merge ZEEL with and into SPNI and combine their linear TV networks, digital assets, production operations and program libraries.
The merged company will retain Zee’s stock market listing in India. But Sony will provide a large cash injection and control a majority share stake of close to 51%. The agreement, first announced in September, is subject to regulatory and shareholder approvals.
Zee’s Punit Goenka will lead the combined company as its MD and CEO. The majority of the board of directors will be nominated by the Sony Group and will include the current SPNI MD and CEO, N.P. Singh. After the deal is completed Singh will assume a broader executive position at SPE as chairman, Sony Pictures India (a division of Sony Pictures Entertainment) reporting to Ravi Ahuja, SPE’s chairman of Global Television Studios and SPE corporate development.
The merger faces a potential roadblock in the shape of the Atlanta-based Invesco fund, which holds 18% of Zee shares. Prior to the merger being announced, Invesco called for an extraordinary general meeting that would remove Goenka as Zee’s CEO and add six directors of its choosing to the board. Invesco’s efforts to achieve this remained persistent until a court order prevented it from calling for the meeting. Invesco has appealed against the order. The deal needs to be approved by 75% of shareholders who express an opinion, Variety understands.
Motivation for the merger stems from massive changes within the Indian entertainment landscape and also from internal corporate pressures within each company.
In a statement, they explained that the deal will create: “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.”
They also said that: “under the stewardship of the Sony Group, a global leader in consumer technologies, gaming and entertainment, the combined company is expected to be able to better compete with the world’s largest streaming players.”
India has one of the world’s largest and most competitive streaming scenes, built on low-cost mobile data and hybrid business models that combine advertising and subscription video on demand.
Streaming companies have aggressively pushed into sportscasting, which was previously the preserve of broadcast television. But the average revenue per user is very low. Netflix this week cut its monthly subscription in India to just $1.97. Both Zee and Sony operate streaming platforms in India, though neither is the market leader.
The move follows years of corporate turbulence at both companies and comes at a time when the massive Indian television landscape is being transformed by vastly wider access to broadband internet and the incursion of streaming video services.
Sony Pictures Networks India has long been an important figure in the Indian television landscape, thanks to its generalist TV channel Sony Entertainment Television which was launched in 1995. But it is understood that SPNI has previously been frustrated in its attempts to either sell off the business or expand it to a larger scale. It currently consists of 26 TV channels, a film production and distribution unit and the widely-viewed streaming platform SonyLIV.
ZEEL was long controlled by the Essel Group. But Essel has been burdened by its own $2.4 billion debts and frustrated by its inability to finance the expansion of ZEEL, which operates 66 linear television channels across 171 countries and is attempting to build the reach of its streaming platform, Zee5, around the world.