Zee-Sony merger: Here’s what Sony is really getting from Zee Entertainment

• Zee Entertainment, which has been a target of allegations of corporate governance issues, will merge with Sony Pictures Networks India.
• The Zee-Sony merger news sent Zee’s stock rallying by over 22% in the first half of the trade on Wednesday.
• In addition to a majority stake in the merged entity, find out exactly what Sony is getting from the Zee-Sony merger.

Zee Entertainment and Sony Pictures Networks India are coming together and the latter is going to infuse an additional $1.6 billion into the merged entity to fund the company’s future growth.

For the Punit Goenka-led entertainment company, this news couldn’t have come at a better time. Zee Entertainment’s largest shareholders had voted to remove Goenka and two other independent directors. While the others have resigned, Goenka anchored down.

Goenka, who presided over the company since the beginning of 2010s, led the company’s rise in viewership share from 10% in 2016 to 20% in 2020, according to a report by Dolat Capital.

While Goenka was staring at an ouster earlier, he will continue in his position as the managing director and chief executive officer of the merged entity.


Shares of Zee Entertainment rallied by over 22% as of 11:50 a.m., on Wednesday (September 22). Overall, Zee’s shares have surged by over 83% in the last one month.


But what exactly is Sony Pictures getting from Zee Entertainment?

According to the specifics of the deal announced by Sony Pictures Networks, it will be the majority shareholder in the merged entity, with a stake of 52.93%, while Zee shareholders will hold a 47.07% stake.

Sony Pictures will also have the right to appoint the majority of the directors to the board. But beyond the corporate side of things, here’s what Sony gets from Zee.

Market share

Zee currently holds a viewership share of 17%, according to a report by Dolat Capital, after slipping 300-350 basis points recently.

100 basis points make up 1%.

In comparison, the current market leader holds a share of 24% viewership.

It has a portfolio of 37 domestic channels and 39 international channels.

“The flagship channel, Zee TV, is at first (or a close second) spot in the Hindi general entertainment channels (GEC) space. Its Hindi movie channel Zee Cinema and regional GECs Zee Bangla and Zee Marathi are strong players in their respective genres/markets,” stated a report by IIFL Securities dated September 15.

Here’s a look at some key financial metrics of the company:

Particulars	FY21	FY22e	FY23e	FY24e
Revenue	₹7,730 cr	₹8,191 cr	₹9,037 cr	₹9,881 cr
Margin (Ebitda)	23.2%	22.6%	25.9%	27.8%
Net profit	₹1,747 cr	₹1,119 cr	₹1,187 cr	₹1,440 cr

Source: Company reports, Prabhudas Lilladher

Zee5

Zee5 is the company’s digital entertainment platform, providing access to Zee’s portfolio of shows and movies on smartphones and smart TVs.

According to reports, Zee5 had 80.2 million monthly active users as of June quarter. Zee5 went on a user-acquisition spree and reduced its annual prices to ₹499 from ₹999. This was immediately visible in the number of users, which increased from 72 million at the end of March this year to over 80 million at the end of June.

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