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Business News/ Industry / Advertising/  Zee-Sony to escalate war for ads, content

Zee-Sony to escalate war for ads, content

New entity to have top viewership of 26.7%, followed by Disney Star with 20%

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. Reuters Premium
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. Reuters 

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.

Speaking at the APOS India Summit by MPA (Media Partners Asia) last November, Punit Goenka, managing director and chief executive officer of ZEEL, had said sports will become an area of focus for the merged entity. With the merger yet to be completed, the two companies could not bid for the IPL rights together earlier this year. “With a combined balance sheet, the ability to bid for major sporting events will be greatly enhanced," said Sanjay Sen, senior advocate, Supreme Court of India.

“The sports genre could also see a churn with the merged entity bidding for a lot of international properties. So, even though Reliance and Viacom18 have the digital rights to the IPL, they need to remain on their toes," the broadcaster mentioned above said. Winning CCI approval may have required the two companies to agree to shut or sell some channels, but media experts said there are hardly any overlaps between the two except the movie genre where their combined viewership is 53%. In the Marathi language, with Zee being the leader, the figure stands at 45%.

Media and entertainment industry experts who see the two companies coming together to strengthen their digital play said ZEE5 and SonyLIV, their two OTT platforms, both cater to audiences in the heartland. Together, they could challenge foreign services such as Netflix and Amazon Prime Video, which are seen as more upmarket, urban offerings. “Because of the IPL, Disney+ Hotstar was commanding two to two-and-a-half times a share of the ad market compared to ZEE5 and SonyLIV together. That, of course, is set to change but the merged entity will anyway have a competitive advantage," Karan Taurani, senior vice-president at Elara Capital Ltd said.

There will be other visible benefits and targets in the form of rationalizing costs, growing revenues and increase in profits, said Sen. “There may be some medium or long-term incentives in matters of introduction of technology, bringing in improved management practices, introduction of new products, financial strength to explore products and markets, tax planning and so on," he added.

In many ways, the merger will be good for the media and entertainment industry as it will provide an impetus for growth in content generation and distribution locally as well as internationally, for the small screen as well as for cinema, said Pooja Tidke, senior partner at law firm Parinam Law Associates. “We will likely see a sharp rise in regional content across digital platforms to cater to the rapidly increasing rural viewership which currently constitutes half of the country’s total viewership. We may also see more regional platforms being launched as a result of the merger," Tidke said. 

A nod from the CCI, however, does not necessarily mean that the deal is sealed, she pointed out. “It is likely that the group’s activities will continue to be monitored by the CCI which can review its position if the conditions proposed do not result in compliance with the parameters laid down under the statute," Tidke added.

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Lata Jha
Lata writes about the media and entertainment industry for Mint, focusing on everything from traditional film and TV to newer areas like video and audio streaming, including the business and regulatory aspects of both. She loves movies and spends a lot of her free time in theatres, which makes her job both fun and a bit of a challenge given that entertainment news often just talks about the glamorous side of things. Lata, on the other hand, tries to find and report on themes and trends in the entertainment world that most people don't notice, even though a lot of people in her country are really into movies. She’s a graduate of the Columbia School of Journalism.
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Published: 12 Oct 2022, 01:02 AM IST
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