Sony has agreed to the appointment of Punit Goenka as MD and CEO of the merged entity, which was as an integral part of the deal
Board of directors of Zee Entertainment Enterprises Ltd (ZEEL) on December 22 approved the merger with Sony Pictures Networks India (SPNI).
Sony will hold 50.86 percent stake in the merged entity, the Board said.
The promoters of ZEEL will hold 3.99 percent, and the other ZEEL shareholders will hold a 45.15 percent stake in the merged entity.
Giving the rationale behind the merger, the Board said, “The Company is inter-alia engaged in TV content development, broadcasting of regional and international entertainment satellite television channels, movies, music and digital business. The Company is India’s one of the largest entertainment networks.”
Under the terms of the definitive agreements signed to merge ZEEL with and into SPNI, Sony will have cash balance of $1.5 billion to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.
While announcing the merger, Zee had said that SPNI has agreed to the appointment of Punit Goenka as MD and CEO of the merged entity, which was as an integral part of the deal. The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPNI Managing Director and CEO, N.P. Singh.
Singh will assume a broader executive position at SPE (Sony Pictures Entertainment) as Chairman, Sony Pictures India (a division of SPE) reporting to Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development.
The merger between the two entities was announced on September 22. Zee and Sony had said that the companies will take 90-day period to conduct due diligence for the process. The period came to a close on December 21.
According to analysts, the merger is significant as the coming together of Zee and Sony will bring tremendous synergies between the two companies that will exponentially grow the business and the sector.
Experts had also pointed out that the merger will create the largest entertainment network in India with a 26 percent viewership share. In addition, Zee-Sony combined will command a share of 51 percent as of Q1FY22 data in the Hindi general entertainment channel (GEC) segment, which is the top genre on TV in terms of viewership. In Hindi movies, which is another top-performing genre, the Zee-Sony entity will have a viewership share of 63 percent.
This is why analysts said that consolidation is a big positive and that the merged entity is a serious contender to replace market leader Star and Disney in the medium to long term.
While Zee and Sony have signed definitive agreements to merge, Zee’s largest shareholder Invesco which along with OFI Global holds nearly 18 percent stake in the media company had raised concerns regarding the possibility of increasing the promoter group’s stake to 20 percent in the proposed Zee-Sony merged entity.As part of the definitive agreements signed on December 22, the promoters of ZEEL have agreed to limit the equity that they may own in the combined company to 20 percent of its outstanding shares. This construct does not provide the promoters of ZEEL any pre-emptive or other rights toacquire equity of the combined company from the Sony Group, the combined company or any other party, the terms of the agreement mentioned. Any shares purchased by the promoters of ZEEL must be in compliance with all applicable laws including any pricing guidelines, the agreement added.
