It's my job to take the best of both firms: Punit Goenka on Zee-Sony merger

CEO and managing director of Zee Entertainment speaks on alliance with Sony India announced on Thursday.

Punit Goenka is looking exhausted but chuffed. The CEO and managing director, Zee Entertainment Enterprises has just announced that the merger of Sony India and Zee is finalised. At Rs 14,000 crore in revenue, Sony Zee will be the second largest media company in India with over a 100 channels such as Sab TV and Zee Marathi. It also internationalises Zee making it part of the California based Sony Pictures Entertainment portfolio. Sony Pictures in turn is part of the $82.5 billion Sony Corp.

Vanita Kohli-Khandekar met with Goenka (PG) in Mumbai. Online were Ravi Ahuja (RA), chairman of global television studios and corporate development, Sony Pictures Entertainment, and N P Singh (NP), managing director and CEO, Sony Pictures Networks India. Edited excerpts of an interview. 

How did this deal come about?

NP: We have built a successful business in India and were looking at the next step for Sony’s growth. A few years ago (in 2018) Punit and I had worked together on the Ten Sports deal (Sony bought Ten Sports from Zee). When this opportunity was discussed between us, we realised that there were a lot of complementary strands. So I took it to Tony (Vinciquerra, chairman and CEO, Sony Pictures Entertainment) and Ravi a year back and they were pleased with the idea.

RA: We want to grow in India. There are many compelling businesses in India of which media is one. It is high-growth and the business fits well (with SPE).

Both Sony and Zee have strong brands both in broadcast and OTT (Zee5 and SonyLiv). What stays, what will be merged, who will head these business, could you share some details?

RA: I don’t think there is a question of choosing. These are two very strong brands. We don’t have specific operational plans for now.

NP: Our focus so far has been getting to the agreement on the merger. Now that it is through we will work on operational synergies.

PG: There is a lot more work to be done. But unless the regulatory approvals, mainly from the Competition Commission of India comes in, we cannot start work on these things. Also Sony, Zee, Ten Sports are all formidable brands in their own right. We will take a decision on these once work begins.

In fact we have yet to decide on a name for the merged entity.

A majority of mergers fail not because the businesses aren’t complementary, like yours are, but because cultures clash. How do you see this one panning out?

NP: Though Sony Pictures Networks India is a part of Sony Pictures Entertainment, it has always been run as a local Indian company. The ethos is completely Indian. Therefore both (Zee and Sony) are local Indian companies with people being at the centre. It is very helpful when we bring the two teams together and ensure that the integration is seamless.

RA: We could talk for days on this one. But the bottom line is you have to be very intentional on this, to define a culture. You have to understand the differences and find a common ground for the two companies to work as one.

PG: SPE has chosen that I lead this merged entity. So it becomes my job to take the best of both the firms and lead. It is not something that will happen overnight. I am committed, the board is committed.

(L-R) Ravi Ahuja, Chairman, Global Television Studios & Corporate Development, Sony Pictures Entertainment and NP Singh, MD & CEO, Sony Pictures Networks India

There has been a lot of controversy around the Invesco court case and the proposal to allow the promoters to increase their stake to 20 per cent.

NP: There will be no preferential arrangement. They can buy back from the open market, up to a cap of 20 per cent.

Sony in India is not used to the public scrutiny that a listed company deals with. How will you cope with that?

NP: Punit is used to public scrutiny (since ZEEL is listed). We will be guided by him.

Three years from now what will this merged entity look like?

RA: To my mind it is all about leadership. Across the world we lead in specific businesses for example anime and gaming shows in Japan. So it is leadership in things like market share, digital and quality.

NP: To make the merger successful we need to drive strong value for shareholders and consumers. We are looking at market share, growth opportunities and profitability in that light. In three years it should be in a leadership position and strong enough to compete with global players.

Where does this firm sit on your global portfolio?

RA: Primarily it is the Indian asset on our portfolio.

PG: But the sheer size of the Indian market is so large that it will be a large business on the Sony Portfolio and will contribute to value creation in the portfolio. It will be the leading media company from emerging markets.

Globally the shape of the media business is changing, broadcasting is under pressure but in India it still has a lot of potential, where does that place this combine?

RA: Broadcasting has a role to play and digital business needs scale. But both these firms have a lot of their content of their own, put it together and it makes for a compelling offering.

PG: The merged company has growth capital of $1.57 billion. In this changing landscape this gives it the potential to take the company to heights that individually each of the companies might not have reached.

NP: Linear TV will continue for the foreseeable future. But the focus and future is on digital. We are seeing so much growth in both old and new subscribers on our platform. We will be investing in content, technology and distribution. The objective is to be in a state of preparedness.