How the Zee-Sony merger can create a regional content behemoth

Zee Entertainment Enterprises Ltd’s (ZEE) merger with Sony Pictures Networks India (SPN) will create a regional content giant in India’s media and entertainment space. The combined entity will have 75 linear TV channels, two streaming services—SonyLIV and Zee5 and two film studios. Experts say that Zee’s investments in regional markets like Tamil, Telugu and Punjabi will help Sony gain strength in wider markets while Sony’s prowess in segments like sports and entertainment will help Zee. Today, 50 per cent Zee5’s viewership comes from regional language content. This is only going to go up, experts say.

 

Both platforms have a major TV following in India and can leverage each-other’s strengths. 

“It will become tough to compete with them. They are going to go aggressively in terms to exploring each other's synergies on advertising, subscriptions, etc. Zee has always been more aggressive in terms of regional than Sony. Sony also gets a lot on the table in terms of content. Both coming together can have a positive impact in terms of regional,” argues Karan Taurani, SVP, research analyst, Elara Capital.

 

He added that Zee is stronger in terms of distribution and Sony will leverage the strength of Zee’s distribution into newer markets which will drive their performance.

 

When it comes to consolidation in the media and entertainment space, televison has already matured, experts feel. “TV won’t see too much consolidation but for OTT, it’s on the cards,” he said.

Taurani also added that the merged entity is a threat for Disney+ Hotstar but there is still a long way to go for them. “Disney+ Hotstar is still 2x of the combined entity. But TV will have a much greater impact with the combined entity coming to the fore,” he said.

 

On the subscription front, digital subscription prices could see a positive impact. “If they make compelling content, deep dive into sports, regional, etc., then they definitely have a pricing power,” Taurani added.

 

According to the latest figures by BARC (Broadcast Audience Research Council), a regulatory authority on the television industry, SONY SAB was the second most viewed Hindi channel after STAR Plus. Zee and Sony, cumulatively, had five channels in the top 10 channels based on viewership. In the rural markets, Zee Anmol was the second most viewed channel followed by other channels of the entity like Sony Pal, ZeeTV, Sony SAB, etc.

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