Business Today
Loading...

Buzz around Zee, Sony, Viacom 18: What's up in the media world?

According to Jehil Thakkar, Partner (Media and Entertainment), Deloitte, in an environment when growth, especially advertising growth, has come down to 7-8 per cent from the earlier 13-14 per cent, consolidation is bound to be on the cards

twitter-logo Ajita Shashidhar        Last Updated: December 2, 2019  | 20:14 IST
Buzz around Zee, Sony, Viacom 18: What's up in the media world?

There is action galore in the Indian broadcast industry. While the pioneer of satellite television in India, Subhash Chandra, relinquished his position as the Chairman of Zee Entertainment last week (after selling off a bulk of his shares in the company he founded in 1992) to service a Rs 11,000 crore debt, Sony Pictures Network and Reliance Industries-owned Viacom 18 is known to be entering into a joint-venture deal. On the other hand, Zee Entertainment could be back in the race for a potential buyout by a strategic partner.

Zee Entertainment promoters wanted to sell their stake to a strategic player. They were known to be in talks with the likes of Sony Pictures Network and Comcast. But Zee MD, Punit Goenka, had maintained that sale to a strategic partner didn't work out as the latter were taking time to decide and Goenka had a deadline to repay his loan.

According to Jehil Thakkar, Partner (Media and Entertainment), Deloitte, in an environment when growth, especially advertising growth, has come down to 7-8 per cent from the earlier 13-14 per cent, consolidation is bound to be on the cards. "For most broadcasters it is Hindi general entertainment and regional which is holding forth in terms of revenue. All those who have a prominent tail (niche genres like English entertainment, infotainment and so on) are facing the heat and want to either sell out or merge with a network which has a more diversified play."

Thakkar expects consolidation. He says a lot of this has to do with the increasing need of having a prominent OTT play. "Media companies need greater capital and content to have an OTT play and are feeling the need to merge."

If Sony and Viacom were to merge they would have access to 60-odd channels, their respective film studios as well as their OTT businesses, Voot and Sony Liv. Sony, which has always been striving for a regional play will get Viacom's film business and Viacom will benefit from SPN's sports portfolio. However, a section of the media industry feels that the Sony-Viacom merger will not add value to either of the parties. "Both Viacom and Sony (barring Viacom's regional channels) mostly cater to urban markets and don't reach out to the heartland. The only possible synergy of strength for Sony is Voot, that too because Viacom has a significant hold on kids content that kids watch  on Youtube and not on the app. Even then Voot has nothing of consequence on its digital platform that will compensate the sad story of Sony Liv," says media industry expert, Ashish Kaul. He believes that a Sony-Zee merger would make more sense, as it would give Sony access to the masses, which is clearly missing in its current portfolio.

Who will buy Zee?

If Sony and Viacom join hands, what will happen to Zee? Kaul expects a monopoly between Disney-Star and Reliance. "If I were Reliance, there would have been nothing better for me than Zee. It controls mass entertainment and it is profitable."

However, Harish Thawani, Chairman, Nimbus Communications, doesn't see a monopolistic media industry in the near the future. "I don't expect any earth-shaking change in the next one year as the sector has slowed down." He, however, doesn't rule out buyers circling around Zee one year from now.

Though Thawani refuses to speculate, other industry observers are not ruling out the possibility of the likes of Comcast and AT&T considering buying out Zee. "With China closed down, India is the only market for international players to invest. In fact, Zee is the only asset available," says a senior media industry expert. The media industry expert says that while it is more likely for global media companies to invest in Zee, he wouldn't be surprised if Kalanithi Maran of Sun makes a wild card entry in the race to buy Zee. "Sun can never compete in the Hindi markets organically. At the same time Star and Zee have majorly eaten Sun TV's shares in the southern markets. So, buying Zee could be a good way of hedging risks." While a strategic investor investing in Zee will surely be on the cards, bulk of the media industry isn't sure if Reliance would be in the race to acquire Zee.

Unlike Kaul who predicts a Star-Disney versus Reliance play, Thakkar of Deloitte anticipates a triangular battle in the long run.

Also Read: Uddhav Thackeray may junk Devendra Fadnavis' bullet train, expressway, hyperloop projects

Also Read: Airtel, Reliance Jio, Vodafone Idea tariffs: Who has increased how much?

Also Read: Indian economy to grow 6.5% in FY21; private investment to bounce back: OECD

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close