Sony's India unit has agreed to merge with local rival Zee Entertainment their television stations, film assets, and streaming platforms, enabling them to compete in India with Netflix and Disney.
The deal is the outcome of an exclusive negotiation period during which Zee and Sony Pictures Networks conducted due diligence on each other.
Following the merger's completion, the new combined business will be listed on the Indian stock exchange. The acquisition is subject to the fulfillment of certain standard closing conditions, including regulatory, shareholder, and third-party approvals.
Following the deal, Zee will own 48% of the combined firm, while Sony Pictures will own roughly 53%. An recent report disclosed the two sides were due to sign a binding merger deal before Christmas, within the pre-agreed 90-day exclusivity period.
India, which is still heavily reliant on direct-to-home television entertainment, has seen a boom in competition from streaming platforms such as Netflix Inc, Amazon.com's Prime Video, and Walt Disney's HotStar in recent years.
Comprising of roughly 74 news, entertainment, sports, and movie channels, the Sony-Zee combination now has a chance to overtake Disney's Star India as the country's largest player.
The combined entities will feature popular channels such as Sony MAX and Zee TV, as well as streaming platforms like as ZEE5 and SonyLIV.
According to the companies, Sony Pictures would have a cash position of $1.5 billion at the time of the acquisition's closure, which will include an inflow from its own investors and Zee promoters.
Zee's top boss, Punit Goenka, will be named as chief executive officer and managing director of the consolidated entity, which will be publicly listed in India.
Five Sony executives will serve on the combined firm's nine-member board of directors. The executives are Tony Vinciquerra, chairman and chief executive officer of Sony Pictures Entertainment; Ravi Ahuja, chairman of Global Television Studios; and Erik Moreno, executive vice-president, according to sources.
The merger was announced on Wednesday after a 90-day due diligence period ended on December 21, and while the parties have signed definitive agreements, it is still subject to regulatory clearances.
Zee's stock see-sawed in tumultuous trade early on Wednesday, after climbing 35% to a market capitalization of more than $4.5 billion when the agreement was announced in September.
Combined, they should be well-positioned to meet growing consumer demand for premium content across entertainment touchpoints and platforms, owing to their respective strengths in scripted and factual programming, as well as their respective distribution footprints in India and respective iconic entertainment brands and brands.
