ZEE Entertainment, Viacom18 Merger Could Change Industry Dynamics

ZEE Entertainment and Viacom18 might announce a merger in the coming days. Both the companies are already serving the Indian market with over-the-top (OTT) content and further produce their own movies, and are into the broadcast business as well. For the unaware, ZEE Entertainment was founded by Subash Chandra of Essel Group.

Note that the majority of the company is owned by foreign institutional investors, including Ofi Global Fund China LLC and Invesco Oppenheimer Developing Markets Fund. Viacom18 was formed out of a joint venture between TV18 Broadcast Ltd and ViacomCBS Inc, where TV18 owns a majority stake. TV18 is one of the units of Network18 Media and Investments Ltd. The company is majorly owned by Reliance Industries Limited (RIL).

Both the companies are very wealthy in terms of resources and reach in the Indian market. Upon merging, the new entity will have enough resources to fund and produce multiple projects all at the same time.

The biggest boost that the new entity will be able to provide to the business will be a new and evolved OTT platform. But since neither of the companies has announced anything officially, this information will have to be categorised as speculation.

If the merger does take place, the newly formed entity will have the largest number of TV channels under its ownership and the largest market cap in the respective industry. Network18’s stock today closed at Rs 53.35, up 2.79%, possibly on the back of a speculated merger. Network18 has a market cap of Rs 5,433 crore, whereas ZEE has a market value of Rs 21,300 crore.

Shall the deal go through, the promoters of Viacom18 will have a majority stake in the newly formed entity since 65% of the ZEEL is already owned by foreign institutional investors. Further, the person related to the matter said that the deal would only go through once ZEEL’s share price is moderated by 15%-20%. Any official word on the same remains to be announced by the concerned companies.