Home / Industry / Media /  Sony’s slated merger with Viacom18 now called off

NEW DELHI : Sony Pictures Network and Viacom18 have abandoned a plan to merge their businesses after discussions that continued for about a year and a half, said two people familiar with the development.

Viacom18 is a 51:49 JV between Reliance-owned Network18 and Viacom. The deal would have given Sony a 74% stake in the merged entity.

The change in plans comes as digital media and entertainment emerge as cornerstones of Reliance Jio’s business with media consumption, particularly on digital platforms, surging with people spending more time at home during the pandemic.

The news was first reported by The Economic Times on Monday.

Spokespersons at Sony and Reliance Jio did not respond to emailed queries.

“There were some challenges on valuation and Viacom frowning upon some merger clauses," said one of the people cited above. Consequently, the deal did not seem to find favour with Reliance that now sees immense potential in its digital media business, especially with the introduction of the fibre-to-home strategy that provides access to 12 OTT (over-the-top) streaming apps including Netflix, Amazon Prime Video, Disney+ Hotstar, JioCinema, Zee5, Sony Liv, VOOT and Alt Balaji.

“Further, Reliance is in a much different place now than it was a year-and-a-half ago," an analyst said on condition of anonymity referring to the range of investments Reliance Industries has attracted over the past few months from US private equity firm Silver Lake, General Atlantic, KKR and Abu Dhabi-based sovereign wealth fund Mubadala Investment Co. The initial synergy between the two companies reportedly stemmed from two factors. First, giving Reliance greater control over the Indian entertainment ecosystem and helping it keep the content pipeline going for its distribution networks of DEN and Hathway, both cable service providers, and its broadband and internet service JioFiber. Second, from the portfolio of TV channels that Viacom owns, particularly in the Hindi GEC (general entertainment channel), regional and kids segments that Sony, in itself, isn’t particularly strong. Viacom includes channels such as Colors in various languages, MTV and Nickelodeon.

Media industry experts had earlier pointed out that Sony’s overall TV performance is very seasonal. Its marquee TV shows, like Kaun Banega Crorepati, for instance, come once a year and its attempts to venture into the regional TV space, too, haven’t really materialized. It had come close to acquiring a stake in both Eenadu TV and MAA TV, a bouquet of Telugu channels in 2013. A partnership with RIL would have helped it fill in critical gaps through Viacom’s large bouquet of entertainment channels in eight regional languages apart from giving it an important ally to scale its sports business in the future.

Besides television, the other synergy could have been on the two video streaming platforms owned by Sony and Viacom18, SonyLIV and VOOT. Both, media experts said, would have been able to stand up to the might of American players such as Netflix and Amazon Prime Video as well as Disney+ Hotstar.

“A lot has changed for Reliance during covid and it probably doesn’t need Sony as much," said the analyst mentioned above.

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