Punit Goenka as MD & CEO integral to deal with Sony: Zee Entertainment

On the merger approval, the company said, "We have entered into an exclusivity with the other party for 90 days wherein we will be conducting the due diligence. Post that we will be taking the scheme to NCLT (National Company Law Tribunal) and SEBI (Securities and Exchange Board of India), and of course, shareholder approval is required. So, whatever, timeline is required to meet all this, and to get all these approvals will be followed."

The company added that Competition Commission of India (CCI) approval is part of the process. "Our internal assessment says that it will not be a problem," it said.

Goenka's assessment is that while CCI norms are different for different sectors, in this scenario, it will be a national-level evaluation and not a state-level evaluation.

He further said, "The deal has been arrived at with Sony after months of negotiation and preparation. And I think we have a formidable real deal on the table today. Of course, it is subject to due diligence and the necessary documentation that needs to take place. But beyond that I don't see any risk in the transaction."

The coming together of Zee and Sony

Talking about the proposed merger which he said is bringing tremendous synergies between the two companies that will also exponentially grow the sector, he said, "Zee and Sony India will together form the largest media and entertainment player in India and become a market leader across genres and languages with a dynamic scale of close to $2 billion in revenue."

He further said that as part of the merger deal, Sony will infuse $1.6 billion cash which will enable the merged entity to accelerate its digital platform and significantly invest in premium content including sports.

The cash balance Zee has is $170 million as of June 2021 and the cash brought in by SPNI will be $1.57 billion which will be over and above the $170 million, Goenka pointed out.

He also noted that Zee had sold the Ten Sports franchise to Sony about five years ago and now it is coming back to the merged entity and to Zee.

"The digital landscape has created an ecosystem for monetisation of sports. And therefore, this represents a good opportunity for the combined entity to really re-enter the (sports) space. This merger brings us the opportunity of the kids and sports bouquet which we did not have earlier," added Goenka.

While Zee on its own stayed away from re-entering the sports business, the merger will now offer Sony's large bouquet of sports channels.

"Sports will become an area of focus for the merged company but the decision of aggressively bidding or not bidding will be taken by the board of the merged company. But it will remain as a core portfolio for investment thought process," he agreed.

While sports will be the area of focus, Goenka said that the primary objective will be the growth of the company overall. "Now, whether that will be for the digital or sports business that the new board of the merged company will decide," he said.

Channel rationalisation

He also noted that channel rationalisation will happen at a later date because each channel has its unique viewership as well as programming.

"The focus will be on maximising reach and viewership.  Overlaps are there in the Hindi speaking markets of GEC and movies. But the content that exists on the platforms is unique and exclusive. So, the objective will be to maximise viewership and garner revenue rather than shutting down channels," said Goenka.

While more details are awaited regarding how the two entities will operate post the merger, a lot depends on shareholder approval of the merger deal.

Goenka noted that they haven't reached out to other shareholders like Invesco, LIC on the proposed transaction with Sony.