Sony and Zee want to create $10 billion media giant by end of 2022

The planned merger between Sony Group Corp.’s India unit and Zee Entertainment Enterprises Ltd. will create a media behemoth valued at about $10 billion unless hobbled by a courtroom feud underway between Zee’s founders and its largest shareholder.

“The relative value of the combined entity is potentially close to $10 billion. The revenue will certainly approach almost $2 billion,” Punit Goenka, Zee’s managing director and chief executive officer, said in an interview Wednesday. He expects all the necessary approvals to come in eight to 10 months, helping close the deal in the second half of 2022.

The proposed transaction, that will give Sony Pictures Networks India Pvt. a 50.86% stake in the merged entity and Zee’s founders 3.99% while public shareholders hold the rest, creates a media firm with the biggest viewership and pricing power in the country of almost 1.4 billion people.

“In the broadcasting space, they would be numero uno and that will give them tremendous pricing power, especially on the advertising revenue front,” said Vivek Menon, co-founder of Mumbai-based NV Capital. Capital infusion of over $1 billion will also help the Sony-Zee combine challenge streaming giants Netflix Inc. and Amazon.com Inc.’s Prime Video, he said.

The Atlanta-based Invesco Developing Markets Fund — at 18%, it owns the largest chunk in Zee — was unhappy with the way the media firm was run and persistently sought a shareholder meeting to fire Goenka from the board and as CEO in recent months.

The fund did not respond to a Bloomberg email seeking comments on Wednesday’s deal announcement with Sony. The dispute is coming up for a hearing in the Bombay High Court in January.

Goenka said Zee was open to reaching an amicable settlement with Invesco. “I am happy to come and discuss a solution that will work for both of us,” he said. “I have to present a deal which is in the best interest of all shareholders. And their wisdom will prevail.” Business Journal