Zee Entertainment has signed a merger deal with Sony Pictures Networks India Private Limited, the company said in an exchange filing, on Wednesday. Zee Entertainment and Sony Pictures said they have received in-principle approval for a merger that will combine both companies' linear networks, digital assets, production operations and program libraries. Zee Entertainment will hold 47.07 percent, while Sony India will hold 52.93 percent stake in the merged company. Puneet Goenka will continue to provide services to the merged company as MD and CEO for a period of 5 years.
After the deal, promoters of Sony will have the right to appoint a majority of directors to the merged company. In an interview with CNBC-TV18, Abneesh Roy, executive director-institutional equities at Edelweiss Securities, and Himanshu Mody, former head of group finance & strategy at Essel Group, discussed the deal at length.
First up, Roy said, “This process will be volatile. The promoters of Zee will not go away without putting their full effort to retain some level of control in the company.”
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“Fundamentally, this becomes the largest network in the country. This will have 27 percent market share; currently, Zee has 18 percent market share and the combined entity will have around 27 percent market share and will be ahead of Star, which is at 24 percent,” he said.
Meanwhile, Mody said, “It’s a win-win situation for both Zee shareholders and Sony. However, there will be certain cultural mismatches but with Puneet’s (Puneet Goenka) leadership, he should be able to shepherd it through. I do not see any issues in being able to integrate the two cultural mismatches if any.”
For the entire discussion, watch the video