The ZEEL-Sony Pictures Networks Merger Explained


We are about to witness one of the biggest mergers in India’s media and entertainment industry. Zee Entertainment Enterprises Ltd (ZEEL) will merge with Sony Pictures Networks India to form the largest entertainment network in terms of revenue. In this article, we dive into the details of the proposed merger and find out how it would be beneficial for the companies involved.

Details of the Merger

  • The Board of Directors of ZEEL has given in-principal approval for the company’s merger with Sony Pictures Network India (SPNI). The companies have entered into a non-binding term sheet to combine linear networks, digital assets, production operations, and program libraries. The term sheet offers an exclusive period of 90 days, during which ZEEL and SPNI will finalise definitive agreements.  
  • The merged entity will be a publicly listed company in India. Sony’s shareholders will infuse $1.575 billion (~Rs 11,610 crore) and hold a 52.93% stake in the merged entity. Meanwhile, the shareholders of ZEEL will hold a 47.07% stake.   
  • The majority of the Board of Directors of the merged entity will be nominated by the Sony Group. Meanwhile, Punit Goenka will continue as the Managing Director and CEO of the merged entity. However, Goenka’s appointment will be subject to approvals from the board and shareholders of the merged entity. According to the term sheet, the promoter family of ZEEL can increase its shareholding from the current 3.99% to up to 20%.
  • The deal is subject to approvals from the Competition Commission of India (CCI) and market regulator SEBI.

How Will This Merger Benefit Sony Pictures?

Over the past few years, Sony Pictures Networks has been looking for a local partner in India. They aim to compete with the Disney-Star India collaboration, which has been dominating the Indian content market. SPNI had first approached Reliance Industries-owned Viacom for a potential merger. However, the deal did not go through as the companies could not agree on certain merger clauses.

The partnership with ZEEL could be a game-changer for Sony Pictures. Currently, Zee Entertainment derives most of its strength from regional general entertainment channels (GECs) and movies. It holds a larger market share in terms of overall network viewership when compared to Sony Pictures. ZEEL is present across broadcasting, movies, music, digital, live entertainment, and theatre businesses in India and overseas. It has more than 2.6 lakh hours of television content and holds the world’s largest Hindi film library. They also have rights to more than 4,800 movie titles across various languages. The company’s OTT platform, ZEE5, is the largest domestic non-sports platform with ~8 crore monthly average users. 

Meanwhile, SPNI has a stronghold in Hindi GEC and sports segments. It reaches out to over 70 crore viewers in India and is available in 167 countries. The partnership with ZEEL will allow Sony Pictures Networks India to boost its presence in India. If the deal goes ahead, the merged entity will have the potential to secure a market share of 25-26% in terms of viewership. Moreover, the combined market share of SonyLIV and ZEE5 could place them in the third position in the Indian OTT market (after Netflix and Amazon Prime Video).

How Will it Benefit ZEEL?

As we know, ZEEL has been all over the news lately. The company has found itself in the midst of a boardroom battle. Two of its largest investors have called for an Extraordinary General Meeting (EGM) of shareholders to pass resolutions, including the removal of CEO Punit Goenka and the appointment of six new independent directors. According to analysts, the merger with a large international company like Sony could help ZEEL mitigate some of the concerns recently raised by shareholders with respect to corporate governance issues. 


The merger does seem to benefit both entities. ZEEL’s strong expertise in content creation and deep consumer connect, along with SPNI’s success across entertainment genres, will add significant value to the merged entity and its management team. The synergies drawn from both entities could boost business growth and also enable shareholders to benefit from its future successes. The merger will create a media giant that will cut across linear channels, video streaming, and film production. Moreover, the Sony-ZEEL entity would compete with Star India and Viacom18 for acquiring broadcasting rights for IPL, BCCI, and ICC tournaments.

However, the deal has raised a lot of questions— especially with regard to its timing and pace. The merger just happened to develop overnight. ZEEL’s largest shareholders, Invesco Developing Market Funds, are trying to throw out Punit Goenka as CEO and MD due to corporate governance failures. Now, it is surprising to see that he will be leading the merged entity. Many argue that Invesco's actions to “remove” Goenka could have been aimed at pushing ZEEL’s management and forcing them to accept the merger deal with Sony. Market participants have also raised red flags on the exit of Manish Chokhani and Ashok Kurien from ZEEL’s board ahead of its AGM, and Rakesh Jhunjhunwala investing 1% in the company just days before the merger announcement.

We will have to wait patiently and find out whether ZEEL and Sony Pictures Networks actually go ahead with the merger. It could exceed all expectations and potentially become the largest media house in India.  

What are your thoughts on the merger? Let us know in the comments section of the marketfeed app.

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