Davids and Goliaths: What will Sony and Zee’s proposed merger mean for Indian TV?

Star is now Star and Disney India. Discovery and HBO are doing the same. With Sony and Zee’s consolidation, are we heading towards a Google-Facebook-like duopoly on television?

The Indian television market has clear Davids and Goliaths. In 2019, with the closing of the $71 billion deal with 21st Century Fox, The Walt Disney Company acquired Star, becoming Disney Star. More recently, Zee Entertainment Enterprises (ZEEL) and Sony Pictures Networks India (SPNI) finalised a merger deal in September.

Today, Disney Star is at the No. 1 position, enjoying a 21 per cent viewership share, with a turnover of more than Rs 14,000 crore. Zee, at the second position, enjoys a 19 per cent audience share, with a turnover of about Rs 7,700 crore. And, Sony closely follows, with a nine per cent audience share, translating into a top-line of Rs 5,900 crore.

If the Zee-Sony deal goes through, it will be the largest such transaction in the Indian media and entertainment space. Zee and Sony together will have a 28 per cent audience share, more than Disney Star’s. Not matching the turnover, it will create India’s second-largest entertainment network by revenue. It will spawn an entity with 75 TV channels, two video streaming services (ZEE5 and SonyLIV), two film studios (Zee Studios and Sony Pictures Films India), and a digital content studio (Studio NXT).

The panel discussion on the third day of Colors Cineplex presents Television Week 2021 looked at the reasons for such mergers, how it will impact the different aspects of the TV business and the media landscape in India.

Moderated by Sreekant Khandekar, co-founder and director, afaqs!, the panel comprised Jehil Thakkar, partner, Deloitte India; Sujata Dwibedy, group trading director, Amplifi, dentsu international; and Vivek Couto, executive director, Media Partners Asia.

Thakkar opened the discussion, saying that he views this merger as a continuum from where the industry has been evolving over a number of years, with smaller broadcasters getting consolidated into the 4-5 networks that we have today. For example, Maa Television Network being acquired by Star in 2015.

“There are factors other than just pure broadcasting market share at play here, because the industry itself is evolving. We have broadcaster-owned OTT driving a lot of mergers and acquisitions, and decisions around consolidation today. So, customer acquisition in the OTT space is going to be a big spend area and will require financial muscle, going forward.”

Couto said it's the search for scale. “And, scale is redefined in 2021 because, suddenly, you had this revolution of connectivity in India and you've also had three significant regulations of a $10 billion television sector. As people go direct to consumers, and as television moves online and people try to capture these big pockets of consumer and advertising spend, you have to be armed with significant amounts of capital, talent, technology, product and innovation to tackle all of that. While catering to these new audiences moving online, the most important thing is content and programming.”

Dwibedy said that it was already forecasted a decade back that these kinds of consolidations will happen, as Star started acquiring, little by little, all the regional players and Viacom group started acquiring the ETV Network. However, the two giants, Sony and Zee, will give a tough competition to the other players as their product offerings are very similar.

“The Zee and Sony Network really complement each other, in terms of synergies. Their OTT platforms will together compete with Hotstar, which has the second-largest reach, after YouTube, in terms of video space. Apart from tech, they'll have to initiate a lot of new products to establish themselves as a big OTT partner.”

“In terms of television, they both have a large number of channels. By bringing together 75-80 channels, they'll have a brilliant footprint in the regional markets. They also have movie channels and FTA. So, their offering will be huge. If the merger goes through, they will give a huge competition to the other two big players, Star Disney and Viacom.”

You can watch the full discussion below:

‘COLORS Cineplex’, a premium Indian movie destination for great cinematic experiences, is the first-of-its-kind film channel launched by leading media conglomerate Viacom18 Media Pvt. Ltd. Launched in May 2016, the channel provides its viewers with the ultimate movie-watching experience while delivering Viacom18’s promise of showcasing enriching, engaging and entertaining content to the viewers. Through its tagline of Filmein MUST Hain, ’COLORS CINEPLEX’ features multi-genre films including the latest blockbuster hits from Viacom18’s wide library of choicest films.

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