Zee Entertainment has finally signed the merger agreement with Sony Group Corporation amidst an ongoing tussle between Zee founders and the company's largest shareholder. The merger will create India's second-biggest entertainment network and will allow Sony a greater foothold in the Indian market.
The combination will produce an entity with 75 TV channels, two video streaming services (ZEE5 and Sony LIV), two film studios (Zee Studios and Sony Pictures Films India), a digital content studio (Studio NXT), and programming libraries, The Economic Times reported.
Sony Pictures Networks India Pvt. will own a 50.86% stake in the merged entity while Zee's current holding firm Essel will own 3.99%, according to an exchange filing from Zee Wednesday. Public shareholders will have the remaining 45.15% as part of the definitive agreement. Zee's board approved the appointment of Punit Goenka, the son of founder Subhash Chandra, as the chief executive officer of the newly created entity, the filing said.
"It is a significant milestone for all of us, as two leading media and entertainment companies join hands to drive the next era of entertainment filled with immense opportunities," said Goenka to the media. "..."This merger presents a significant opportunity to jointly take the businesses to the next level and drive substantial growth in the global arena."
Chandra's family and Atlanta-based Invesco Developing Markets Fund that owns 18% stake (the largest chunk of equity) are currently engaged in a tussle, with Chandra keen to retain his family's influence while Invesco has called for the removal of Punit Goenka.
The Zee board declined the request and got an injunction against the offshore investor from the Bombay high court. Invesco has challenged the order in front of a division bench and the case is being heard at present. Parallelly, the National Company Law Tribunal (NCLT) is also hearing on the application filed by Invesco.
Acquiring Zee will give Sony access to its more than 1.3 billion viewers globally, and a vast library of local Indian language content that goes back to the 1990s. Zee's own streaming platform is also a leader among local players with almost 73 million monthly active users as of end-March.