The year 2024 could be a game changer for the broadcast industry with two big mergers in sight. Just like a gripping drama series unfolds episode by episode, it will be an exciting year to witness the churn that the broadcast industry will go through because of the two giant unions-Zee with Sony and Reliance-owned Viacom18 with Disney India - which are on the path to create a duopoly.
While theZee-Sony merger chapter,which appears to be on a shaky ground, is looking at a delayed but a certain union despite the timeline of the merger having been already pushed, Mukesh Ambani’sReliance India and Walt Disney’s Indiaarm took the industry by surprise by recently signing a 51:49 cash and stocknon-binding agreement, hinting at transforming the television and OTT viewing experience in the country.
According to industry insiders, both thebig mergersare likely to be completed within the first half of this year (2024).
While theprolongedZee-Sony merger, which initiated the process in 2021, has already missed two deadlines with Zee seeking extension of the timeline,Relianceand Disney have been in talks about the merger for some time and finally made it official by signing the non-binding pact, which primarily sets out the understanding or the principal intentions of the parties.
The process of merger involves majorly the consensus of terms of the merger, due diligence, approvals/ consents from the NCLT, various authorities and stakeholders involved with the party and other third parties towards whom the parties are contractually obligated. This is in addition to the internal regulatory requirements which are prescribed by the Companies Act.
According to Shashank Agrawal, Advocate, Delhi High Court, “In a merger process, usually, some of the approvals which need to be obtained, include those from the Income Tax Department under the Income Tax Act, 1961; from the Registrar of Companies/the ?Regional Director under the Companies Act, 2013; from the Competition Commission of India (CCI) under the Competition Act, 2002, etc. The final seal of approval of a merger scheme comes from the National Company Law Tribunal under the Companies Act, 2013.”
Reliance and Disney as a merged unit are expected to have the biggest pie of the TV ads market at 43%. If the Zee-Sony merger happens, their share is expected to be 25%. The emergence of these two behemoths would create a duopoly and change the landscape of TV entertainment in the country.
At present, Disney Star owns over 70 TV channels in eight languages, a streaming platform Disney+ Hotstar and a film studio, whereas Reliance’s broadcast division Viacom18 owns 38 TV channels in eight languages, a digital streaming platform - Jio Cinema - and a film studio Viacom18 Studios.
While Disney Star has 32% share in the ad market, Viacom18 has 11% ad market share. The merged entity will have 43% ad market share with over 100 TV channels, two streaming platforms and two film studios.
Speculations are rife that both the entities will together invest around $ 1.5 billion into the deal, under which Ambani's firm will gain distribution control of Star India's channels.
Disney Star’s operating revenue for FY23 was Rs 19,857 crore while for Viacom18 it was Rs 4,554 crore.
The $10 billion Zee-Sony merger will create a powerhouse of over 70 TV channels, two video streaming platforms – ZEE5 and Sony LIV – and film studios – ZEE Studios and Sony Pictures Films India – with a market share of 26%.
The FY23 operating revenue for Culver Max Entertainment Private Limited, formerly known as SPNI, stands at Rs 6684.9 crore. The network runs 26 TV channels, a streaming platform – SonyLIV - and Studio NEXT, an independent production venture for original content and Sony Pictures Films India.
On the other hand,ZEEL’s operating revenuefor FY23 is at Rs 8087.90 crore. The network has 50 channels in 11 languages, a streaming platform - Zee5 – Zee Studios, a film production company, and a music arm - Zee Music.
