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Zee-Sony to escalate war for ads, content

NEW DELHI : The impending merger of Zee Entertainment Enterprises Ltd and Sony Pictures Networks India Pvt. Ltd is expected to set the stage for fierce competition in India’s media and entertainment industry, with the combination receiving approval from fair trade regulator Competition Commission of India last week.

Media industry experts and analysts said once Zee and Sony are merged, the combined entity will take on two large broadcasting networks—Disney Star and Viacom18—for a larger share of advertising, as well as in attracting more and more content producers to work with them. With a combined viewership of 26.7%, Zee and Sony are likely to surpass Disney Star in the broadcast segment (the current leader at 20%) and compete with Viacom18 to acquire rights to more sports properties to build its portfolio. Viacom18 currently holds the digital rights to the cricket Indian Premier League (IPL) for five years starting 2023.

“It is a complete win-win for Zee and Sony, who will be able to leverage each other’s strengths and share multiple synergies in terms of ad revenues and sales,” a media buyer said, declining to be named. “It should be quite a positive situation for them,” the person added. Higher ad sales should result from the combined TV viewership share of 26.7% across nearly 75 channels. According to estimates by Elara Capital Ltd, the ZEEL SPN combined entity will command ad revenue market share of 27%, largely at par with Disney Star’s 26.5%. ZEEL reported advertising revenue of ₹4,396.5 crore in FY22.

The media buyer said that along with deals with advertisers, Sony and Zee would be able to wield better bargaining power with distributers such as MSOs (multi system operators) and DTH (direct-to-home) operators.

“Sony and Zee complement each other in many ways. For example, Sony has a strong presence in sports channels whereas Zee has a strong presence in the regional market. The combined entity will have a larger bouquet of channels and services to offer; hence, the bargaining power of the combined entity over distributors and advertisers may increase owing to this merger. It may have the power to extract a higher price or commission or refuse to deal with distributors and advertisers,” said Unnati Agrawal, partner at legal firm IndusLaw.

While Zee and Sony will leverage their synergies in revenue and cost turning the merged entity into a superpower, it may not be an ideal situation for the television broadcast industry, said a senior executive at a broadcast network, declining to be named. “The implications for Disney Star and Viacom18 may be enormous. So far, Star has dominated the GEC (general entertainment channel) space with popular offerings, but Zee and Sony coming together could always result in an underlying silent bias from the producer community,” the person added.

With higher viewership, bargaining power and possibly reach, the Zee Sony entity may attract producers many of whom make multiple shows at the same time and look for prime slots and timings.

“Working with the biggest in the business would be a priority for any maker”, the broadcast executive said.

Disney Star and Viacom18 did not respond to Mint’s queries on possible implications of the merger. Queries emailed to Zee and Sony remained unanswered.

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