99.99% of Zee Entertainment shareholders vote for merger with Sony

Attention will likely shift back to the Competition Commission, which had granted conditional approval to the proposed deal last week

Zee Entertainment Enterprises (ZEEL) on Friday said that nearly 100 per cent of its shareholders had approved its proposed merger with Sony Pictures Networks (SPN) India. Zee had convened a meeting of its shareholders on Friday, following directions of the Mumbai bench of the National Company Law Tribunal (NCLT) in August.

Disclosing its voting results to the stock exchanges on Friday evening, the company said that 99.99 per cent of equity shareholders had approved the proposed merger.

In a statement, ZEEL’s MD & CEO, Punit Goenka said that the development would strengthen its abilities to move forward in the merger process.

More importantly, attention will now shift back to the Competition Commission of India (CCI), which had granted conditional approval to the proposed merger of the two companies last week.

A statement from the Zee on October 4 had said that the CCI had granted the approval in Phase 1 after evaluating the official legal and economic submissions made by the company.

“Considering the immense value which the proposed merger will generate for all its stakeholders, the company has offered the necessary remedies in accordance with the regulator’s guidelines," Zee had said.

A detailed order from the CCI is expected in the next few weeks in the matter.

Zee TV and Sony Entertainment Television are the flagship channels of the two networks in Hindi general entertainment. The two players have a combined viewership share of 36 per cent in Hindi general entertainment, according to year-to-date data from the Broadcast Audience Research Council India sourced from the industry.

In Hindi movies, the combined viewership share is 33 per cent, while in Marathi and Bengali entertainment, the combined viewership shares are 38 per cent and 26 per cent each.

Zee and Sony had been in discussion with the antitrust regulator for over a month to resolve issues with regard to the proposed merger.

Ahead of the CCI approval, the BSE and the National Stock Exchange had given their go-ahead for the proposed merger on July 29.

To put things in perspective, the Zee-Sony combine will become India’s second-largest entertainment network by revenue with over 75 television (TV) channels, along with two video streaming services — ZEE5 and SonyLIV. It will also house two film studios — Zee Studios and Sony Pictures Films India — and a digital content studio (Studio NXT).

First announced in September last year, the merger was approved by the boards of the two companies in December after a 90-day due diligence period.

Under the terms of the arrangement, Sony will hold 50.86 per cent stake in the merged entity. The promoters of Zee will hold 3.99 per cent and other Zee shareholders will hold 45.15 per cent stake in the combined company.

Sony will also inject cash of $1.5 billion into the merged entity to enable it to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, and pursue other growth opportunities.