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Tag: Punit Goenka

  • Post SAT order impact – Media & entertainment – Win-win for Z-Sony

    Post SAT order impact – Media & entertainment – Win-win for Z-Sony

    Mumbai: The Securities Appellate Tribunal (SAT) passed an order on 30 October 2023 allowing Mr. Punit Goenka to become CEO and MD of the merged company, Zee Entertainment-Sony (Z-Sony). Based on our assessment of the detailed order (Zee SAT order) and channel checks with legal experts, we believe the SAT order is a positive for Goenka, as it states he can continue as MD and CEO, as there no strong evidence yet to support the allegations of money siphoning against him; further, his counsel has provided adequate evidence and documents to substantiate it.

    Post this order, there is a high likelihood the Securities and Exchange Board of India (SEBI) will appeal against the order in the Supreme Court to get a stay; however, Z-Sony merged co. can be formed with Goenka as its head in the interim. The SAT order also states the investigation in this case will continue; as per our assessment, the outcome could take 12-18 months; Goenka could obtain necessary legal recourse in case the outcome is against him in the medium term; if it is favourable, he will continue as usual.

    This underscores our view that there is no likelihood of Sony backing out from the merger, and Goenka getting relief could lead to expedited timelines for the merged entity to be formed with him at the helm, as it may not require changes in the term sheet or any shareholder and Board approval. Further, appeals made by Axis Finance and IDBI Bank will have no impact on the merger, and the NCLT approval is without any conditions. We believe the merged entity record date could be announced in the last week of November or in the first week of December, which means the merged firm could be listed in January 2024 (post six weeks of delisting). We maintain BUY with a Sep’24 TP of Rs 340.

    SAT order removes overhang on merger: Goenka to be reinstated as CEO of merged entity

    The SAT order is a significant victory for Goenka. Nevertheless, it is expected that SEBI will persist with its investigation, as the allegations against Zee Entertainment appear to hold merit. However, Sony will have to appoint Goenka as CEO of the merged company; further, this will not lead to change in the merged entity board and merger timelines. It is highly likely that SEBI will file a statutory appeal against the SAT order in the Supreme Court in the next 60 days. If this were to take place, the earliest date for a hearing would be scheduled for the first week of January 2024. Therefore, we believe there is no likelihood of Sony backing out of the merger as there are no legal constraints preventing it from proceeding. Further, the cases before the National Company Law Appellate Tribunal (NCLAT) against Zee will continue and will have no impact on the merger.

    SEBI to continue with the investigation without a timeframe

    As per the order, SAT has acknowledged the allegations of fund diversion have yet to be proven, and both Zee Entertainment (Z IN) and Goenka have presented satisfactory explanations supported by documentation, effectively fulfilling the burden of proof. Additionally, SAT also says it has noted factual inaccuracies in the order issued by whole-time members regarding specific companies that were classified as Essel Group companies when in fact they were not, but at this moment it is not fair to punish Goenka because the merger of Zee-Sony has been allowed. Nevertheless, SAT has granted SEBI the authority to proceed with its inquiry into the alleged fund diversion of Rs 42.1bn by Subhash Chandra and Goenka, without establishing a specific timeframe for the investigation. Z and Goenka have been instructed to cooperate with the investigation.

    Merged entity likely to be listed between December 2023 and March 2024

    We expect the merged entity to get listed anytime between December 2023 and March 2024.  This will depend on how Sony wants to take it forward. The RoC (Registrar of Companies) filing has been done and processes required for the merger could end in the next four weeks. The investigation timeline could vary between 12 and 18 months post the merged entity is formed. In case allegations are not proven, things will continue as usual. However, in case allegations are proven, Goenka may have to step down or find legal recourse. Post the merged entity is formed with Goenka as CEO, our checks with legal experts indicate that Sony may also support Goenka in legal proceedings against SEBI, which also provides comfort.

    We retain our positive stance on Z-Sony merged company

    In the newly configured merged entity Board, five out of nine directors would represent Sony, with the Chairman also hailing from Sony. This shift in Board composition is anticipated to lead to an enhancement in corporate governance at Z along with a change in management dynamic favouring Sony. We retain our positive stance, led by:

    1) synergistic benefits

    2) MNC control (superior corporate governance practices)

    3) positive impact of consolidation in the TV industry

    4) Scaling up of the OTT business.

    The credit of this article goes to Elara Capital SVP Karan Taurani

  • Sebi contemplates Supreme Court Appeal After SAT Rules in Favor of Punit Goenka

    Sebi contemplates Supreme Court Appeal After SAT Rules in Favor of Punit Goenka

    Mumbai: After the Securities and Appellate Tribunal (SAT) overturned the Sebi order that imposed a one-year ban on Punit Goenka, the CEO of Zee Entertainment Enterprises (ZEEL), prohibiting him from holding managerial and directorial positions in listed companies, reports are suggesting that the market regulator may contemplate appealing to the Supreme Court. Additionally, there are indications that the Zee board might soon convene to discuss Goenka’s status in light of the favourable SAT ruling.

    Previously, the tribunal had barred Subhash Chandra, the Chairman of the Essel Group, and Goenka from assuming significant or directorial roles for a year, alleging that they had redirected funds from the listed entity for personal benefit. Following this, Goenka appealed the Sebi order to SAT, which has now quashed it.

    With SAT’s decision to invalidate Sebi’s directive, industry observers believe that it could expedite the Zee-Sony merger, as the company is no longer burdened by the legal uncertainties that were previously a source of concern.

  • Industry celebrates Punit Goenka’s achievements over the years

    Industry celebrates Punit Goenka’s achievements over the years

    Mumbai: Punit Goenka has held the position of MD & CEO at ZEE Entertainment Enterprises Ltd. since 2010 and has achieved numerous notable successes during his tenure. His extensive experience, deep industry knowledge, and exceptional leadership skills have set him apart as a prominent figure in the media and entertainment sector. He is widely recognized for his pivotal role in establishing ZEE as a global entertainment brand, reaching audiences not only in India but also in 190 countries worldwide. With the support and confidence of India Inc., shareholders, employees, advertisers, and content creators, Goenka, at the age of just 48, possesses the necessary business acumen to guide the envisioned merger of ZEE and Sony towards a promising future.

    Goenka, boasts more than two decades of experience in the media and entertainment industry, stands as one of the most accomplished business leaders in the sector, characterized by his acute business acumen. Over a span of three decades, he has steered ZEE successfully, identifying trends and transforming it into a media and entertainment powerhouse.

    Distinguished as one of the youngest and most prolific leaders, he has an impressive list of achievements to his credit. His profound understanding of audience preferences has been instrumental in driving ZEE’s expansion into regional markets, revitalizing the studio business, launching India’s second-largest music label, and more.

    His active involvement in shaping the future of the entertainment landscape spans diverse capacities. Currently, he serves as a board director for the Indian Broadcasting & Digital Foundation (IBDF). In the past, he held the position of Chairman of the TV measurement body BARC India, playing a crucial role in its founding team. He has also served as Chairman of IBDF, leading important discussions with policymakers. Additionally, as the President of the International Advertising Association’s (IAA) India Chapter, he addressed crucial industry-level interests and introduced several intellectual properties tailored to the advertising and marketing community. In many of these roles, he was re-elected for a second term by unanimous member consensus.

    Goenka’s success in elevating ZEE’s performance over the years stems from his ability to identify opportune moments for scaling and constructing a diversified portfolio. His forward-looking vision has propelled the company to global recognition, with ZEE establishing an international presence in over 190 countries and reaching more than 1.3 billion viewers. In his capacity as the leader of India’s largest publicly-listed Media and Entertainment Company, Goenka demonstrates a profound understanding of the overall legal and regulatory environment. He remains unwavering in his commitment to creating value for all the company’s shareholders.

    Leading an impressive portfolio that encompasses 50 domestic channels, 36 international channels, an OTT platform, a movie studio, and a music label, his experience in consistently managing profitability and surpassing industry margins quarter after quarter positions him well to replicate the success of ZEE within the anticipated merged entity, which is poised to become a formidable force in the Media and Entertainment (M&E) sector.

    Goenka’s unwavering and optimistic approach equips him to navigate challenging circumstances, as exemplified when TRAI introduced the New Tariff Order, creating uncertainty for businesses. In response, he actively engaged with partners and key stakeholders to facilitate solutions that fostered the growth of the pay-tv ecosystem. His profound understanding of both technology and content, two crucial elements in today’s evolving entertainment landscape, underscores his competence. Notably, Goenka enjoys robust support from ZEE’s shareholders and investors, and he has cultivated substantial industry relationships. His ability to prioritize the interests of all stakeholders in his decision-making process is a hallmark of his leadership.

    Hailing from an entrepreneurial background, he has instilled strong values and an entrepreneurial spirit within ZEE, fostering an environment where talent can flourish under his guidance. ZEE is recognized today as an Academy of Talent, nurturing numerous industry luminaries to their pinnacle of success.

    Continuing to attract top-tier talent to the company, not only from the M&E industry but also from sectors such as FMCG and Banking, is a testament to Goenka’s ability. In an M&E industry facing a shortage of high-quality talent, particularly for an organization of ZEE’s scale, his talent acquisition strategy is pivotal for ensuring stability and growth. He has demonstrated his readiness to make tough decisions when they are necessary for the company’s profitability and the collective interests of all stakeholders. This includes the strategic exit from sports broadcasting when it wasn’t financially prudent, followed by a robust re-entry into the sports business, capitalizing on improved monetization opportunities in the segment.

     

     

     

     

  • SAT sets aside SEBI order against ZEE promoters

    SAT sets aside SEBI order against ZEE promoters

    Mumbai: SAT has quashed SEBI’s order of barring Punit Goenka from holding key directorship in listed entities over the alleged fund-diversion case.

    Our view

    Implications of the event

    Scenario 1- This may expedite the Zee/Sony merger process; if SEBI gives a go ahead in favour of Punit Goenka, without going to the Supreme Court, post the detailed order that is to be released tonight. In this case, we expect the record date to be announced around last week of November 23. This in turn means that the listing of the merged co. will happen towards the first week of Jan ’24. Further, with Goenka coming on Board, there will be no need for any changes in the term sheet, or any Board/shareholder approval required for change in CEO; this also means that business will be as usual for ZEE and lesser transition time with little change in senior management.

    Scenario 2- SEBI can also move to the Supreme Court to appeal for a stay against SAT’s order. Further, the SAT order may only mention that Goenka can continue as CEO of Zee or the merged co; however, SEBI’s investigation on grounds of fraud may continue after this relief by SAT. This in turn means that there is still a high likelihood of the merger going through without Goenka. We believe there is a low likelihood of Sony allowing Goenka to continue as CEO of the merged Co, unless the issue with SAT is resolved (in case of SEBI going to Supreme Court). In this case, there may be a delay in the merger too, if Goenka changes his stance  and waits for the outcome of investigation; if Sony does not wait, then merger will go through as usual and the merged co will get listed by Jan’24

    Change in media landscape – a big benefit for Zee/Sony

    With Reliance wanting to acquire Disney, the media landscape on TV/OTT side will see a big consolidation as two large players – 1) TV18/Disney and 2) Zee/Sony could potentially command a market share of 67%/53% (TV18/Disney and Zee/Sony together) on TV/OTT in India; which could shift bargaining power in their favour and help them grow ahead of industry averages, as other players may scale down in the ecosystem

    No overhang of CG issues

    With Sony coming as a parent company, we expect no CG (corporate governance) issues in the future, which in turn will drive re-rating of valuation multiples for Zee.

    The stock has corrected more than 10 per cent from its peak over the last three months post the NCLT approval in Aug’23, citing delay on the merger. We await 1) the detailed order and 2) SEBI’s response on the above judgement order passed by SAT to allow Goenka to be a part of Z to assess the actual impact of the above decision for the merger and Goenka; we have a BUY recommendation on Zee with a Sept 24 TP of Rs 340 – we will await more developments over the near term on above.

    Background of the event

    • On 12 June 2023, SEBI banned ZEE promoters Chandra & Goenka from holding directorial, key managerial roles over allegations of fund siphoning. On 13 June 2023, ZEE promoters approached SAT against the order following which SAT provided SEBI 48 hrs. to file a reply against ZEE’s plea.

    • On 10 July 2023, two weeks of time were provided by SAT to ZEE promoters to file a response against the interim order. Meanwhile ZEE formed an interim committee of senior executives to run operations at the company.

    • On 14 August 2023, SEBI asked for 8 months of time to complete investigation of alleged fund diversion by Zee promoters (due to significant red flags in the transactions between Zee and Essel entities) which was again challenged by ZEE on 26 August 2023.

    • On 27 September 2023, SAT reserved order on the case after hearing from both the parties.

    • On 30 October 2023, SAT quashed SEBI’s order barring Goenka from holding key directorship in listed entities over the alleged fund-diversion case.

    The credit of this article goes to Elara Capital SVP Karan Taurani

  • MNC media juggernaut arrives

    MNC media juggernaut arrives

    Mumbai: The National Company Law Tribunal’s (NCLT) approval for the Zee Entertainment -Sony merger without conditions offers further respite for Z valuation, which has been muted for the past two years (the stock has not given any absolute returns). The company will now move to Registrar of Companies to file for the merged entity once the final NCLT order is released; in the interim, we await the outcome of the SEBI and SAT cases against the Goenka family, the promoter, which may not have any adverse impact on the merger, as Punit Goenka has already stepped down from the Board; in a worst case scenario, the Board and shareholders will appoint a new CEO in case SAT order is against Punit Goenka. Post the regulatory approvals, Z will be delisted, and the merged company will be relisted as Sony-Zee wherein 100 shares of Z will enable shareholders to get 85 shares of the merged entity (~2-3 months process). We do not expect any change in the deal contours despite the long delay, as NCLT has approved the scheme. Further, Sony will get a majority shareholding of 50.8 per cent in the merged entity whereas the Goenka family’s stake will move up to 3.99 per cent, which includes the non-compete fee. We do not expect any impact from creditors filing a case against the NCLAT order.

    Moat remains for the merged company

    Z-Sony commands an ad market share of 24 per cent as on CY22, below the other large peer, Star-Disney, which is at 33 per cent; formation of a large entity on the broadcasting side would lead to cost and revenue synergy, which would offset the negative impact of lower growth rates (India TV ad revenue CAGR has been flat over FY20-23).

    Valuation: reiterate Buy with a higher TP of Rs 340

    We expect better execution in terms of strategic initiatives, due to global expertise and better CG (corporate governance) initiatives , which should propel higher cashflow. We do not expect Z-Sony valuation moving to 32- 33x fwd. P/E (peak valuation multiple in FY18). This is because India’s media landscape has changed with 1) TV broadcasting growth rates converging, and 2) digital business offering limited opportunity for monetization & scale due to disruption; however, we expect the negative impact to be offset by: 1) the merged company, and 2) an MNC-backed firm, which would lead to P/E at a 40 per cent discount vs peak (32x one-year forward). We introduce FY26E for the merged entity and value the core broadcasting business at 20x (from 17x) one-year forward P/E (potential exit of Disney from linear TV may enable Z-Sony to gain market share). We rollover to 24 Sept (since synergies will take some time to kick in) SOTPbased TP of Rs 340 from Rs 300 (after factoring in higher sports losses), with a cash infusion from Sony, synergy and valuing the OTT business 4x one yr. fwd. EV/Sales; our PAT estimate incorporates potential OTT losses.

    The credit of this article goes to Elara Capital SVP Karan Taurani.

  • “Our focused efforts and investments in content and user experience enhancements are displaying positive results”: ZEEL MD & CEO Punit Goenka

    “Our focused efforts and investments in content and user experience enhancements are displaying positive results”: ZEEL MD & CEO Punit Goenka

    Mumbai: Speaking in a conference call, ZEEL managing director & CEO Punit Goenka said during the company’s Q2 FY23 earnings call that he remains hopeful of a steady recovery in the advertising environment during the second half of the fiscal given some of the green shoots due to a good monsoon and the onset of the festive season.

    “We are utilising this period to further strengthen the resilience and fundamentals of our business across all aspects. Our focused efforts and investments in content and user experience enhancements are displaying positive results. Going forward, we remain cautiously optimistic about the overall advertising sentiment gradually recovering through the second half of the fiscal year, which will further aid revenue growth.”

    While the underlying impact of the macroeconomic headwind across the industry continued to spill over in the second quarter of the fiscal year, Goenka emphasised, “That said, we have been able to moderately grow our advertising revenues sequentially in the second quarter on the back of our network share gain and focused efforts from our ad sales team.”

    He noted that the merger with Sony should be completed within this financial year. “As you would know, this is something that we are grappling with on a daily basis because the regulatory approval is required, and we can’t give you one final date. The number of days required for delisting or the company’s continued delisting, our expectation is it will be about five to six weeks.”

    Talking about sports being a newer growth opportunity. Goenka mentioned, “In addition to strengthening our current offerings, we are also consistently identifying new growth opportunities for sustained value creation. We took yet another firm step in this direction by sharpening our strategic vision to build the sports business for the company. The strategic licensing agreement with Disney Star makes Zee the exclusive TV destination for all ICC events starting in 2024. Going forward, all our investment decisions to make the sports segment a compelling value proposition for the company will continue to be taken with a prudent approach. Our energies remain focused on enhancing performance across platforms through compelling content offerings and delivering a robust user experience.”

    “For instance, our linear viewership share has increased QoQ, and our key markets like Hindi and Tamil are showcasing an improvement in their performance.” He explained that both in Tamil and Hindi, it is basically implementation and picking the right shows that have worked for it. “In Hindi, particularly, both fiction and non-fiction have done well for us. Tamil is still largely fiction-driven, and we are pretty confident that these will now continue to grow from here. They are stabilised at this level, and now we should see more growth coming. In Marathi, as I mentioned in previous calls to Abneesh, it was an implementation and team issue. A new team was formed about a quarter of a year ago. They are working on plans for getting the turnaround to happen in Marathi, too. I’m quite hopeful that in the next couple of quarters we’ll see something turn around there.”

    When asked about the reason for the NTO 2.0 delay, Goenka stated, “I don’t know what Trai was planning to do, but as I understand it from informal sources, they were trying to build consensus amongst all the stakeholders. As you will understand, building consensus in this industry among broadcasters, cable operators, and DPOs is not easy. I think that is largely the reason for the delay.”

    “My view is that they are finished with all the discussions and everything. We should see the NTO guidelines come out anytime now. As Rohit (ZEEL CFO Rohit Gupta) mentioned, the 28 of February is the deadline they have kept, but I’m quite confident that they will not miss this deadline,” he added further.

    Gupta noted that in the absence of a clear path ahead for NTO 2.0, the near-term outlook for subscription growth remains uncertain and muted. “We will continue to monitor NTO 2.0 guidelines and will be prepared to implement the same for improved long-term revenue outcomes.”

    When asked about the possibility of rethinking capital allocation towards movies given the disappointing performance of Hindi cinema, Goenka said that the company is rethinking or re-studying its movie portfolio strategy and maybe rejigging the capital allocation within that. “So, instead of spending a lot more on, let’s say, Hindi, for example, do we want to spend a little bit more on the regional languages, which are doing much better than the Hindi side, but will we completely look at reducing capital allocation to movies. No, that’s not in the thought process.”

    When asked if it makes sense to buy movie rights after their theatrical release, Goenka responded that, unfortunately, the industry does not work that way because these films are sold even during production. “If we were to wait for the film to be released in theatres and then take the chance of buying the film, there is a risk to that as well. So therefore, the industry is behaving in the manner that it does. Therefore, we have to participate and play the game as per the industry, and our view is that we would also like to continue to build and buy as little as possible. At times that’s not possible, but we are working on that strategy,” he concluded.

  • ZEEL equity shareholders give thumbs up to Sony-Zee merger

    ZEEL equity shareholders give thumbs up to Sony-Zee merger

    Mumbai : Zee Entertainment Enterprises Ltd (ZEEL) has announced that the company’s equity shareholders have approved the proposed merger of ZEEL and BangIa Entertainment Pvt. Ltd. with and into Culver Max Entertainment Pvt. Ltd . (formerly Sony Pictures Networks India Pvt. Ltd.)

    The company called the meeting of its equity shareholders on 14 October in accordance with the National Company Law Tribunal (NCLT), Mumbai Bench, order dated 24 August in order to ask for approval for the proposed merger.

    The proposed merger resolution was presented during the meeting, and 99.99 per cent of the equity shareholders of ZEEL enthusiastically endorsed it.

    The company said, “The approval marks yet another firm and positive step forward, in the overall merger completion process.” ZEEL managing director & CEO Punit Goenka will be the managing director and CEO of the amalgamated business.

    After an exclusive negotiation period in which both parties engaged in mutual due diligence was over, Sony Pictures Networks India (SPNI) and ZEEL finalised the merger in December of last year.

    The promoters (founders) of ZEEL will hold 3.99 per cent of the combined company after the transaction closes, while the remaining ZEEL shareholders will hold a 45.15 percent stake. Sony Pictures Entertainment Inc. will indirectly hold a majority of 50.86 per cent of the combined company.

    Through a subsidiary, Sony Pictures Entertainment (SPE) will pay certain Zeel promoters a non-compete fee in accordance with the transactions envisioned by a non-compete agreement. The non-compete fee will be used by these promoters (founders) to provide SPNI with initial equity funding, granting them the opportunity to buy shares in SPNI that, on a post-closing basis, would equal roughly 2.11 percent of the total shares of the combined company.

    Goenka said, “On behalf of all the Board members and management of ZEEL, I would like to thank the equity  shareholders of the company for recognising the value-accretive opportunities the proposed merger will deliver to all stakeholders. The continued trust and overwhelming  support by our equity shareholders towards the resolution of the Composite Scheme of Arrangement, further strengthen our abilities to consistently deliver higher value as we  move forward in this process.”

    The Competition Commission of India (CCI) granted ZEEL permission in a communication dated 4 October. The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have also given the company their approvals for July 2022.

    The Composite Scheme of Arrangement is still pending approval from the relevant authorities and other parties.

  • India’s first private satellite TV channel Zee celebrates 30 glorious years of entertainment

    India’s first private satellite TV channel Zee celebrates 30 glorious years of entertainment

    Mumbai: Zee Entertainment Enterprises (ZEEL) celebrates 30 years of glory in India. The company has transformed the media & entertainment industry by providing the best experiences to audiences in India and around the world.

    Throughout its glorious three-decade journey, the company has consistently evolved, paving the way for it to become one of the most iconic home-grown brands. From its humble beginnings as the country’s first private satellite television channel, Zee has made significant contributions to the nation’s liberalisation journey by driving positive societal change on and off screen.

    The company’s spokesperson said, “Today, Zee is not only a well-loved household name, but it also enjoys a formidable position as a global media & entertainment powerhouse with its consumption platforms as the cultural ambassador for Indian content on the global stage.”

    In line with its Zee 4.0 vision, the company is broadening its horizons by establishing a strong tech foundation through its state-of-the-art technology and innovation centre to boost innovation and data-led capabilities, as well as recently re-entering the sports segment.

    The company further added that the mantra at Zee has always been to lead by example, demonstrating its commitment and determination to create a robust version of the company while also defining the future of the media and entertainment industry in India.

    On this milestone, Zee Entertainment Enterprises MD & CEO Punit Goenka said, “It is indeed a momentous occasion as the nation’s first home-grown entertainment company, Zee, completes three wonderful decades of entertainment and value-creation. This milestone is extra special as we also celebrate the genesis of the media & entertainment industry in India. Zee’s journey over the years can be defined by its sharp growth, its risk-taking ability to constantly tap into newer avenues and its consistent vision to generate higher value for all stakeholders.”

    He added, “As  we lay the strategic roadmap for the next 30 years, we are gearing up to propel the company’s growth and transform into a formidable player from the emerging markets. With our sharp strategic vision across the business coupled with a keen eye on profitability, our endeavour will always be to stay ahead of the curve. I would like to extend my gratitude to all our viewers, stakeholders, and partners, for sharing this memorable journey with us and expressing their continued faith in our capabilities.”

    For three decades, Zee has been known as an academy of talent, and its alumni have played an important role in shaping the industry’s future.

    On this occasion, several stalwarts acknowledged the industry and Zee’s contribution towards making India a formidable economy on a global stage.

    Actor Vidya Balan expressed, “It fills me with pride to note that Zee, the institution that gave me a platform to showcase my talent through an iconic show like Hum Paanch, has completed 30 magnificent years. Zee has been a home to a thousand stars and has relentlessly encouraged homegrown talent, irrespective of their background, to achieve their dreams. I hope that the company continues to remain a beacon of hope for budding talent across the nation and wish the Zee family all the very best for the journey ahead.”

    A leading investor and ENAM group co-founder Vallabh Bhansali stated, “As someone who believes in entrepreneurs as the prime drivers for creating valuable businesses, I have always trusted Zee’s ability to generate consistent returns for its stakeholders. I have been an ardent admirer and supporter of its amazing entrepreneurial journey—from a single channel on a rented transponder to a global media conglomerate. Throughout its journey, Zee has taken necessary risks and proved time and again its ability to stay ahead of the curve. I congratulate Punit and team for achieving this glorious milestone and wish them all the best for a bright future.”

    Zee has also made significant contributions to the welfare of society, driving positive societal change not only through iconic stories but also through various initiatives that improve the lives of people from all walks of life.

    Zee is laying a strong foundation for its next phase of growth by focusing its investments on television, digital, and its movie production businesses.

  • NCLT seeks shareholder nod for Zeel-Sony merger

    NCLT seeks shareholder nod for Zeel-Sony merger

    Mumbai : Phew! One more hurdle is set to get out of the way to create what could possibly end up being India’s largest media entertainment behemoth with the proposed merger of Zee Entertainment Enterprises Ltd (Zeel)  and Sony Pictures Networks India (SPNI).

    The National Company Law Tribunal’s  (NCLT’s ) Mumbai bench has directed Zeel to convene a virtual shareholder meeting  on 14 October at 4 pm  to get their nod for the merger.

    In July 2022 , Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) gave their approval. But the Competition Commission of India (CCI) has yet to give its approval as it is investigating how the fusion will affect market dominance. The NCLT direction was made last month but Zeel communicated this  to the Bombay stock exchange (BSE) only on 7 September.

    “The ]NCLT  Mumbai bench has directed in its order, that a meeting of the equity shareholders of Zeel be convened and held on Friday, 14 October   for the purpose of considering, and, if thought fit, approving the proposed merger of the company with Culver Max Entertainment Pvt Ltd  (formerly SPNI Pvt Ltd),” read Zee’s statement.

    In July 2022, Zee received approval from the BSE  and the  National Stock Exchange (NSE) for the  proposed merger. According to reports, both the firms  have been in constant contact with the competition watchdog for more than four to five months for getting its nod.

    When the merger plan was announced in September 2021, the two networks said that Sony would invest $1.575 billion and have a 52.93 Per cent  interest in the new firm and Zee the remaining 47.07 per cent.

    Last year, in December, SPNI  and ZEEL signed definitive agreements for the merger following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence.

    When the transaction is completed Sony Pictures Entertainment Inc will indirectly control a majority of 50.86 per cent of the combined firm and the promoters (founders) of Zeel  will hold 3.99 per cent, while the remaining Zeel shareholders would hold a 45.15 per cent stake

    Under the terms of the definitive agreements, SPNI, which is an indirect subsidiary of Sony Pictures Entertainment (SPE), will have a cash balance of $1.5 billion (assuming an INR: USD exchange rate of 75:1) at closing, including through infusion by the current shareholders of SPNI and the Zeel promoters, , to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.

    In accordance with the transactions envisioned by a non-compete agreement, SPE, through a subsidiary, will pay a non-compete fee to certain Zeel promoters.. These promoters (founders) will use the non-compete fee to inject primary equity capital into SPNI, giving them the right to purchase shares of SPNI that, on a post-closing basis, would equal about 2.11 per cent of the total shares of the combined company.

    Zeel CEO Punit Goenka  will serve as the combined company’s managing director and CEO.

    Earlier  Invesco along with OFI Global China Fund LLC, which together hold about a 17.9 per cent  stake in ZEEL, had opposed the deal.

    In March 2022, Invesco had said it would support the Zee-Sony merger deal and had decided not to pursue the call for an EGM of ZEEL to remove Goenka and two independent directors.

    Additionally, Invesco said it would support the Zee and Sony merger, adding that the “deal in its current form has great potential for Zee shareholders,” but added that Invesco retains the right to request a new EGM if the merger is not completed as currently proposed.

    With 75 TV channels and two video streaming services (ZEE5 and Sony LIV), the merged entity will become India’s second-largest entertainment network by revenue. It will also house two film studios — Zee Studios and Sony Pictures Films India and a digital content studio (Studio NXT).

  • Sony-Zee to create $10 bn TV company; likely to hurt competition in the market: CCI

    Sony-Zee to create $10 bn TV company; likely to hurt competition in the market: CCI

    Mumbai: According to an official notice seen by Reuters, the country’s antitrust watchdog the Competition Commission of India (CCI) found in an initial review that a merger between the Indian unit of Japan’s Sony and Zee Entertainment to create a $10 billion TV company will potentially hurt competition because it will have “unparalleled bargaining power.”

    CCI notice to the two companies sent on 3 August stated the watchdog is of the view that a further investigation is merited. It gave the two companies 30 days from 3 August to respond.

    Sony and Zee in December decided to merge their television channels, film assets, and streaming platforms to create a powerhouse in a key media and entertainment growth market of 1.4 billion people, challenging rivals like Walt Disney Co.

    According to the three lawyers familiar with the process mentioned, the CCI’s conclusions will delay regulatory approval of the acquisition and might require the companies to propose changes to its structure.

    They also added that if that doesn’t satisfy the CCI, it can result in a drawn-out approval and inquiry procedure.

    Zee in a statement said it continues to take all the required legal steps to complete all the necessary approval processes for the proposed merger.

    According to the CCI’s 21-page notice, the proposed deal would place the combined entity in a “strong position” with around 92 channels in India, citing Sony’s global revenue of $86 billion and assets of $211 billion.

    “Such apparently humongous market position would enable the combined entity to enjoy an unparalleled bargaining power,” the CCI said in its notice, adding the combined entity could increase the price of channel packages.

    The initial review shows the deal is likely to cause an “appreciable adverse effect on competition,” the watchdog said. “Thus, it is considered appropriate to conduct further inquiry into the matter.”

    In a media interview held in December last year, Zee’s managing director Punit Goenka stated that the combined entity’s relative value is “potentially close to $10 billion” and that all necessary approvals are expected by October of this year.

    Classic Merger Case

    According to industry executives, the deal will allow the two companies to compete with Disney’s Star India network, which has dozens of popular entertainment and sports channels, by attracting more advertising revenue from streaming services and TV broadcasts.

    The combined company would have a share of almost 45 per cent of the Hindi language market, which attracts the greatest viewership in the nation, according to the preliminary CCI competition assessment, with Star coming in a “distant second.”

    This would further concentrate such segments at the cost of the competition, the CCI said in its notice.

    Sony and Zee had already responded in June and July to two so-called “defect” letters issued by the watchdog inquiring about the deal.

    After reviewing submissions about advertising revenue, the CCI concluded that the combined company would probably raise the price of some advertisements in order to take advantage of its dominant market position.

    “The combined strength of the parties is likely to be used to entrench their presence and earn higher profits,” the CCI said.

    “This merger is a classic case of the first or second largest player, integrating with the third largest competitors, to become the strong market leader.”