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Zee to re-enter sports after Sony merger but will face tough competition from Star

After the merger, Zee will get access to Sony's 10 sports channels which includes the recently launched regional channel Ten 4.

September 23, 2021 / 08:44 PM IST
 
 
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The Ten Sports franchise which Zee Entertainment sold to Sony five years ago will come back to Zee after the merger with Sony Pictures Networks India (SPNI), Punit Goenka, MD, and CEO of Zee said.

"The digital landscape has created an ecosystem for monetization 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.

After the merger, Zee will get access to Sony's 10 sports channels which includes the recently launched regional channel Ten 4. Other sports channels include Sony Six, Sony Ten 1, Sony Ten 2, Sony 3 along with the HD versions of all these channels.

SPNI offers sports properties such as WWE, FIFA (Fédération Internationale de Football Association), football championship EURO, cricketing properties like this year's India tour of Australia, England tour of India.

"Sports will continue to be one of the most important verticals for the combined group entity as Sony has been entrenched in that vertical for more than a decade, said Vivek Menon, Co-founder of NV Capital, a media and entertainment financing group.

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It's Star versus Zee-Sony

While sports will be a key aspect for the combined entity, Sony-Zee will face tough competition from Disney & Star.

"Currently if you look at the landscape, the competition is between Disney & Star and Sony where Disney & Star have all the marquee properties," Menon added.

While it was estimated that Sony earned around Rs 700-800 crore in advertising revenue from sports broadcast in 2019, Star that year had pocketed around Rs 2,100 crore in ad revenue from the 12th edition of the Indian Premier League (IPL) alone.

This is why analyst Karan Taurani, Senior Vice-President, Elara Capital, said there was a big gap between the two networks.

He pointed out the ad revenue that the streaming platforms of the two networks mint.

"If Sony LIV makes Rs 150-160 crore out of that about 70 percent is sports. Compare this number to Rs 800 crore that (Dinsey+) Hotstar makes on the AVOD (advertising video-on-demand) side. Out of this, IPL alone is Rs 500-600 crore and other sporting properties is around Rs 200-300 crore. So, it is 7x of what Sony would make."

He added that it is cricket that is in the commanding position here as around 80 percent of the spending is cricket-led.

Even Sony used to attract strong ad dollars when the network had the rights of IPL. In 2017 which was the last year before the broadcasting rights of the league was bought by Star, Sony had registered around Rs 1,300 crore in ad revenues during the 10th edition of IPL.

Sports is substantial

To bridge this gap, it is expected that the merged entity will make big investments in sports especially with Sony bringing in $1.57 billion.

"Sony will infuse USD 1.6 billion cash which will enable the merged entity to accelerate its digital platform and significantly invest in premium content including sports," Goenka had said during an investor conference call held on September 22.

Even Menon noted that sports will play a pivotal role in the overall scheme of things for the combined entity.

"And it would have the financial muscle to bid for some of the marquee properties which are coming up for renewal currently being aired on Star & Disney and acquisition of these properties would be a game-changer," he added.

Sports is back with a bang

Sports that is once again in the limelight last year faced a tough year because of COVID-19. But India's love for sports has led to growth in both ad revenue as well viewership for sports channels.

"IPL 2020 was the first sports tournament to surpass 400 billion viewing minutes, according to the Broadcast Audience Research Council of India.

Since the last edition of IPL, Star Sports has added an incremental 10 percent subscribers, with the overall penetration of the channel at close to 80 percent," noted Nitin Mukhi, Associate Director, RBSA Advisors.

Taurani said that ad revenue of sports channels which is 10-12 percent of the ad revenue pie came down to 4-5 percent last year."

"This year it has surpassed pre-COVID trends. Viewership also would have surpassed pre-COVID levels because of the number of (sports) events," he said.
Maryam Farooqui
Tags: #Companies
first published: Sep 23, 2021 07:58 pm

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