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ZEEL-Sony mega merger: Know from experts what it means for shareholders

ZEEL-Sony Pictures Networks India merger: The stock market has welcomed the deal. Shareholders are also seeing good signs from the mega merger.

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The mega merger announcement between Zee Entertainment Enterprises Limited (ZEEL) and Sony Pictures Network India (SNPI) has created quite a stir in the corporate world. The stock market has welcomed the deal. Shareholders are also seeing good signs from the deal. The joint entity will emerge as one of the big companies of the entertainment industry in the coming days. Market experts have also shared their opinion on the mega merger.

Talking to Zee Business Managing Editor Anil Singhvi, ENAM Securities chairman Vallabh Bhansali stressed that such a big merger in the industry is significant in many ways.

Media’s biggest merger

Vallabh Bhansali highlighted that the merger is between two large enterprises, noting that enterprising is a big thing and both companies have worked really hard to create their place in the market in the face of competition.

This is the biggest merger in the media industry in India, similar to the mega Walt Disney and Star merger that took place in the US. Mergers follow a trend where when the economy matures and the consumer market develops, consolidation is witnessed.

Coming together of enterprising cultures beneficial

As per Bhansali, such a merger in media is highly complicated. This is because media is genre- and personality-based, with each entity having a separate kind of audience. These two companies have seen each other for a while. There are a number of good things in Sony Pictures but hasn’t been able to achieve market share as per its potential. Zee TV had its own channels.

This merger is not just significant because of the size but also the complimenting nature of the deal. Two enterprising cultures coming together instils hope. Both have experience. Both have the potential and intention from the business point of view.

What benefits does the merger bring?

As per Bhansali, advertisers will benefit from the mega merger because of a bigger network with regional, vernacular and sports. The capabilities of language that Zee TV brings will ready a powerful platform for advertisers to leverage.

Sony has hold over sports and humour while Zee TV is strong on family entertainment. The strong base of many regional channels is beneficial from the merger point of view. This will bring down the operating cost substantially. Regional offices will also be beneficial. Both companies will see benefits at every level.

What can shareholders expect?

Bhansali says the mega merger is fantastic news for minority shareholders. The stock has already seen a jump of more than 20 percent but it is too early to say what will happen ahead.

However, it is a win-win situation from the perspective of small shareholders. The board will expand with a balance of professionalism and enterprises. Small shareholders will be winners from the size and business character point of view.

Shareholders should note that they won’t just hold shares of Zee Entertainment now but will be a part of a bigger MNC and an overseas company.

Punit Goenka staying MD, CEO makes complete sense

Bhansali said that Punit Goenka is one of the best managers in the industry and rated very-very highly. It was surprising that he was being asked to leave the board. However, this may have its own reasons.

But Punit Goenka stayed on despite the share of his family reducing. This is not surprising. Punit has had a good position in the market. Both companies have enterprising cultures and in such a situation, the choice of Goenka seems completely logical. He knows how to run companies better than they currently are. This is also a good more from the shareholders’ point of view. Institutional shareholders are also of the view that Punit has experience and the right business mindset.

Beneficial for Sony

As part of the mega merger, ZEEL will have 47% share while SNPI will have 53%. Promoters will also have the room to increase their share from 4% to 20%. As per Bhansali, the family knows the business very well and Sony is doing nobody a favour.

Sony knows the positives of having the Zee family in it. The company has global experience. Entertainment business is not an easy playfield. But Sony knows this fact. Having an enterprising culture is important. That’s why Sony has kept Zee family a part of the future. Zee has given a great performance in entertainment over the years. While other businesses have had their ups and downs, Zee Entertainment has grown continuously.

Disclaimer: Zee Entertainment is not our sister concern/ group company. Though our names sound similar our company is owned by Zee Media Corporation which is a different group.

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