Sony and Zee Lock India merge into one large TV network

Sony’s Indian unit has reached an agreement with local rival Zee Entertainment to merge their TV channels, films and streaming platforms and join forces to take on Netflix and Disney in India.

India, where live TV entertainment is still very popular, has seen stiff competition in recent years from streaming platforms such as Netflix Inc, Prime Video from Inc and Hotstar from Walt Disney Co.

The Sony-Zee alliance with around 75 news, entertainment, sports and film channels is now threatened with losing Disney’s Star India as the country’s top player.

The combined company, which will be nearly 51% owned by Sony Pictures Networks India (SPNI) and 3.99% owned by the founders of Zee, will become popular channels like Sony MAX and Zee TV, as well as streaming platforms like ZEE5 and include SonyLIV.

SPNI will have $ 1.5 billion in cash on completion of the transaction, including a cash injection from its own shareholders and Zee’s promoters, the companies said in the address.

Zees Big Boss Punit Goenka has been named CEO and Managing Director of the merged company, which will be listed on the Indian Stock Exchange.

This move should ease pressure from shareholders to reorganize Zee’s management, particularly with regard to the removal of CEO Goenka from the board of directors due to corporate governance issues.

Most of the board members of the combined company will be appointed by the Sony Group, including the current CEO of SPNI NP Singh as chairman of Sony Pictures India, a division of SPNI’s parent company Sony Pictures Entertainment (SPE).

Singh said he would oversee SPE’s investments in India and identify opportunities to expand Sony’s presence in the country, according to an internal memo from Reuters.

Wednesday’s announcement follows a 90-day due diligence period that ended on December 21. Although the parties have signed definitive agreements, the completion of the transaction is subject to certain regulatory approvals.

Zee stock, which climbed 35% to nearly $ 4.5 billion when the deal was announced in September, floated in volatile exchange rates early Wednesday.