Sony Pictures Networks India (SPNI) and ZEEL entered into a definitive agreement to merge ZEEL with and into SPNI. As per the deal, the merged entities’ linear networks, digital assets, production operations and program libraries will be combined. One of the key factors to be watched out for post-merger is the strategic roadmap for OTT investments.
ZEE, which has a larger portfolio of 49 channels across genres, including general entertainment, movies, and sports have a strong foothold in the regional TV space. SPNI operates 26 channels, including sports. The OTT platform of ZEE- Zee5 has a strong lineup of Regional TV Shows and originals while SonyLIV is at the nascent stage of investing in the regional markets. On the other hand, SonyLIV comes with high impact sporting events like domestic and international cricketing events, WWF, and Football tournaments. Hence, the synergy between the two platforms will create a vast opportunity and boost its competitive position.
The combined Monthly Active users of ZEE5 and SonyLIV is about 140 million and that of Hotstar’s entertainment content is around 192 million. As per the estimates by Motilal Oswal Financial, the merged entity can spend Rs 30 billion annually which is similar to Netflix’s Rs 30 billion India content investment over the last two years. This could be far better utilized as a merged entity to ensure a steady flow of movie content and other genres
The merged entity will have a better market standing (revenue and cost synergies), given its scale and ability to intensify its OTT foray. The combined entity will have revenue of Rs 140-150 Billion and an EBITDA generating capability of 35% in the linear business, which sums up to Rs 50 billion.
With the right strategies and content approach and investments the merged entity could certainly have a strong positioning to compete in the OTT market in the country. The war chest is likely to fuel the growth of the Indian OTT space with competition heating up to deliver cutting edge content to attract the digital audience.
