The upcoming merger of Sony Pictures Network India (SPNI) and ZEE Entertainment (ZEEL) would make the combined entity the largest media conglomerate in India—with a 28% share (leaving behind the current market leader, Disney-Star, with a 22% share). When the two come together, it would also become impossible for advertisers not to have them in their advertising plan, and this could lead to revenue synergies to the tune of 6%-8%. Punit Goenka, MD and CEO, ZEE Entertainment—who is all set to take over as the MD of the merged entity—says, “What I would have wanted to achieve in five years, I would now want to achieve in three years, since I have access to growth capital. We also have access to content that is coming from Sony India and global. The revenue synergy will help us to make our business even more profitable by FY24. We will be a media powerhouse from the emerging markets.”

However, what the newly merged entity would have to do in a hurry is accelerate its digital/OTT strategy, which is a non-starter for both ZEE and Sony. The former’s ZEE5 and the latter’s SonyLiv are at the bottom of the viewership chart—with a share of 9% and 4% respectively (while Amazon and Netflix each have a 20% share and Disney+Hotstar has a 17.5% share). The video streaming market is set to reach $18 billion by 2026, with almost 70% of the population connected with high-speed internet by 2026. “Both ZEE5 and SonyLiv are not in a great spot. They have a lot catching up to do,” says Paritosh Joshi, former CEO of India TV, currently principal at Provocateur Advisory.

Former Walt Disney India executive (currently the country manager at ASEAN Business Partners), Kavita Panda, says that both SonyLiv and ZEE5 need a complete content rehash. “They have low revenue as well as a low subscriber base, unlike Netflix India which may have a low subscriber base but has the highest revenue. If one were to make a 4x4 grid on cost per month and consumers, ZEE would probably be in the worst quadrant.”

Goenka doesn’t disagree. “The industry is not wrong, we have made several experiments and we have failed many times. We finally seem to be getting it right with ZEE5. With the merger and the sports portfolio getting added, it will make the strategy stronger. By virtue of the merger, we will become the No. 2 player after Hotstar in terms of subscribers.”

Digital, says Goenka, will be the merged entity’s biggest priority. “It has already been a priority for us for the last two years. Most of our investments are skewed towards digital, and going forward also, it would be the same,” he further adds. After having sold off his sports business to Sony in January 2018, Goenka is back into the sports fray with the acquisition of rights for the Emirates Cricket League. “Until digital didn’t become a critical mass, we didn’t see sports as a viable business in linear television. However, given the current situation and the way markets are evolving and platforms are evolving, we have decided to reinvest in sports, that’s why we bought the Emirates Cricket League and will even consider IPL,” says Goenka.

Former India TV CEO, Joshi, says the legacy broadcasters not only have to worry about each other’s digital strategies as well as that of Netflix and Amazon Prime Video, but they also can’t lay their eyes off platforms such as Google and Facebook either. Facebook, for instance, owns the digital rights for ICC cricket and had even bid $600 million to stream IPL. “The platforms have an edge in terms of both consumer base as well as rich data around them. They can direct content to individuals and create stickiness, and are now hungry to acquire content. Legacy broadcasters have an amorphous sense of audience and are clearly intimated by the tech platforms,” says Joshi.

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