Sony Pictures Networks India picks up majority stake in Zee Entertainment

Sony Pictures Networks India (SPNI) is taking a majority stake in local conglomerate Zee Entertainment Enterprises (ZEEL), creating a new media giant in the country.

The merger will combine the two companies’ linear networks, digital assets, production operations and programme libraries and will hand SPNI 52.93% of the business.

Under the deal agreed yesterday, SPNI will invest US$1.6bn to enhance the combined company’s digital platforms along with its ability to bid for broadcasting rights in the fast-growing sports landscape and pursue other growth opportunities.

Investors in ZEEL removed the current board members two weeks ago, resulting in the departure of non-executive directors Ashok Kurien and Manish Chokhani.

Despite facing calls for his own departure, former CEO Punit Goenka, whose family owns a 4% stake in ZEEL, has been made CEO of the new joint venture with an option to increase his family promotion group’s stake to 20% over time.

For now, the other 47.01% of Zeel belongs to the shareholders. The deal gives SPNI the right to nominate the majority of the other board members, as well as Goenka, and is subject to a 90-day due diligence period.

“We have unanimously provided an in-principle approval to the proposal and have advised the management to initiate the due diligence process,” said ZEEL chairman R Gopalan.

“ZEEL continues to chart a strong growth trajectory and the board firmly believes that this merger will further benefit ZEEL. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth but will also enable shareholders to benefit from its future successes.”