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Home / Opinion / Views /  An honourable climax for the founders of Zee

As curtains begin to descend on the corporate drama around control of Zee Entertainment Enterprises, with its founding family pitted against its largest shareholder Invesco, the arc lights are on Punit Goenka, founder Subhash Chandra’s son who Invesco had sought to oust as Zee’s chief executive earlier this year by virtue of an 18% stake in the broadcaster. On Wednesday, Zee announced the conclusion of a merger pact with Sony Pictures Entertainment that seems like a white-knight rescue. While Sony’s near 51% ownership of the combine would mean its chunk of equity will heavily outweigh the family holding of almost 4%, Goenka will continue as the business’s chief. Yet, the power disparity is stark. Not only will board control rest firmly with Sony, the deal places a cap of 20% on the family’s stake, should they opt to mop up shares from the market. As it takes at least a quarter of the equity pie to veto a leadership switch, this limit would deny the family a say if such a question were to arise.

After a fierce battle to stave off what looked like a hostile takeover bid, Chandra and Goenka can heave a sigh of relief, though the agreement awaits regulatory and shareholder approvals. While the merger will create a mega broadcaster, it is unlikely to dominate the Indian market in a way that would attract antitrust attention. Sundry shareholders, on their part, are expected to look for value gains, which will depend on the synergy that Zee and Sony can strike together. Since this is an alliance between a family-founded media group and a professionally-run multinational, integrative efforts would need to be handled delicately. Which brand, for example, will act as its flag-bearer? Also, corporate cultures tend to vary widely in this industry, at least partly because risk-return calls often go by fine judgements that take qualitative inputs. Showbiz, after all, is a business of sensibilities and sensitivities. What could also complicate matters are charges of management impropriety levelled by Invesco. And these are only the internal reasons why Goenka can expect his stewardship to be under watch.

Consider the market that Zee-Sony must address. Its array of 75 TV channels may look formidable right now, and content production as a joint forte could hold the business steady, but its future will probably be shaped by how it pivots online to capture audiences that resist advertising breaks, spoilt as many are by ad-free streaming services. Zee5 and Sony Liv, the main offerings of the two partners, are up against a big-budget thrust for local viewership by Netflix, Amazon Prime and Disney+Hotstar, which have already skimmed top-end viewers in India and are keen on mass eyeballs. With a war chest of $1.5 billion, much of it to be infused by Sony shareholders and Zee founders under their deal, the new entity would need to deploy a large portion of it to engage our multitudes before that ambitious trio of apps can. And it will also have Reliance’s forays to contend with. With such stiff rivalry in a rapidly emerging space, Zee-Sony may need to rely more than its rivals on a feel for the market’s pulse. Getting people to pay for what they watch, of course, is a challenge for all players trying to reach out widely with their fare. Under Goenka, the new combine will have to protect legacy revenues even as it ventures deeper into a space being moulded by Big Tech to entertain us with novel formats in a ‘metaverse’. Its script for success will have to go well beyond ‘never give in’.

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