The impending offers is likely to be concluded in 2024, making it the 12 months of consolidation within the media and leisure (M&E) industry. There have been a number of acquisitions and investments within the media and leisure trade in 2023. The consolidation throughout the area means it will depart the trade with 5 or 6 main gamers.
As per the FICCI-EY report, the media and leisure trade grew by Rs 34,800 crore (19.9%) to achieve Rs 2,10,000 crore, 10% above its pre-pandemic 2019 ranges.

The consolidation

From time to time consolidation has at all times performed a key position. The intensifying strain from buyers to attain DTC (direct-to-consumer) profitability is a catalyst for additional consolidation exercise, particularly for the group of comparatively smaller gamers that depend on money flows generated by fading linear belongings, as per the FICCI-EY report. In the over-the-top area, one such instance is the upcoming acquisition of MX Player. As per a number of experiences, Amazon Prime Video can be within the race to accumulate the platform. It is believed that strategic combos will simplify the streaming market for shoppers, generate price financial savings that may be utilised to fund funding in higher content material, advertising and marketing and know-how, and rationalise an trade panorama that’s pushed by world heavyweights as we speak. “Linear television in India continues to hold significant value, not only due to its profitability but also because the low-cost local IPs featuring recurring episodic content have now found a strong resting place on streaming. The ongoing merger between Sony and Zee, along with the potential acquisition of Disney India by Reliance, if realized, will allow industry incumbents to achieve scale, enhance profitability, and maintain competitiveness,” Mihir Shah, vp, Media Partners Asia, mentioned.

To make sure it hasn’t been a clean sail for ZEEL. While the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Competition Commission of India (CCI) accredited the deal, the Securities and Exchange Board of India (SEBI) barred Punit Goenka and Subhash Chandra from holding key positions within the merged entity in its interim order. However, the Securities Appellate Tribunal (SAT) declined the interim order by SEBI and requested for a extra appropriate order in two weeks. SEBI once more barred the duo from holding key positions within the merged entity regardless of the merger getting approval from the National Company Law Tribunal (NCLT). SAT put aside SEBI’s order, overturning the ban imposed by the market regulator.

As RIL and The Walt Disney Company transfer nearer to a merger, it’s anticipated that the deal will face its share of difficulties. As these consolidations choose up tempo, the trade could have 5 or 6 main gamers publish the mergers and partnerships. The mergers would lead to a duopoly within the M&E trade, given their umbrella of channels and digital platforms. While Sony-Zee’s merged entity would personal greater than 70 channels and two movie studios, RIL and Disney Star’s merged entity would create India’s largest media home, proudly owning greater than 70 tv channels throughout eight completely different languages from Star India together with 38 channels from Viacom18, a subsidiary of RIL. Moreover, the merged entity would additionally personal two digital streaming platforms, Disney+ Hotstar and JioCinema, as per a current report by Growthpal, an M&A deal sourcing platform.

Industry consultants opine that the mergers would lead to intense competitors between the key gamers, additional resulting in innovation in content material, know-how and companies. Furthermore, the entities would possibly put money into immersive experiences, higher content material suggestion engines and higher content material supply mechanisms. Experts highlighted that the duopoly would possibly carry an finish to the aggressive value wars, minimising the detrimental impact on the trade’s monetary health.

However, trade consultants shortly identified that the duopoly might restrict decisions for shoppers as the 2 merged entities achieve management and pricing energy over the trade. Limited competitors would result in limiting content material decisions, an absence of choices, and views for shoppers. “The mergers of Sony-Zee, and RIL-Disney Star would most likely create a duopoly in the M&E ecosystem, given their umbrella of channels and digital platforms. Out of the two, the RIL-Disney Star entity would be larger, but Sony-Zee would still boast an impressive portfolio. As outlined previously, both merged entities would have a strong domestic television channel and streaming platform portfolio,” Maneesh Bhandari, founder and CEO, Growthpal, a merger and acquisitions deal sourcing platform, mentioned.

Deals in 2023

As the 12 months involves a detailed, the most important deal within the M&E trade was Saregama India buying a majority stake of 51.82% in Pocket Aces Pictures for Rs 174 crore, with plans to probably enhance its stake to 92.6% sooner or later. An further funding of Rs 15 crore has been made via the first buy of shares, based on a report by Growthpal.

Other main offers embody Adani Group buying a stake of 27.26% in NDTV for Rs 602 crore. The acquisition of the 27.26% stake drove Adani’s mixed complete stake in NDTV to 64.71%. Additionally, AMG Media Network, a wholly-owned subsidiary of the Adani Group, acquired a 50% stake in IANS. Viacom18 additionally raised Rs 950 crore in 2023 as James Murdoch and Uday Shankar-promoted Bodhi Tree acquired a further 2.89% stake in Viacom18. Furthermore, PlanetCast acquired Desynova and Surinder Films acquired Addatimes for a non-disclosed quantity.

Partnerships had been huge in 2023 as NBCUniversal signed a multi-year partnership with JioCinema. Meanwhile, Netflix introduced its partnership with Yash Raj Films in September this 12 months. Speaking of mergers, PVR accomplished its merger with INOX in February. “Established companies are actively adopting technology-driven strategies through smart investments and acquisitions. The primary objectives are to bolster their market positions, tap into diverse user bases, and enhance their digital footprint to meet the growing demand for varied content. These initiatives also involve incorporating cutting-edge technologies, ensuring a prioritised tech-centric approach in delivering media solutions. In essence, these strategic moves highlight the industry’s acknowledgement of the critical need to embrace technology for sustained competitiveness and to align with the evolving preferences of contemporary audiences,” Bhandari added.

What if…..

While the talks progress for the Sony-Zee and RIL-Disney Star merged entities, there can at all times be a plot twist within the story of those 4 media firms. Reliance allegedly tried to accumulate ZEEL in 2021. ZEEL, nonetheless, denied any talks of a possible merger with Viacom18. Viacom18 was additionally briefly linked with Culver Max Entertainment’s Sony Pictures Network India. According to trade consultants, the deal between ZEEL and Viacom18 was anticipated to be a straight share swap take care of no money involvements. The Zee-Sony deal has been hanging within the steadiness for a very long time now because the merger was introduced in 2021. Zee requested for an extension of the deadline of December 21 on December 17. Even as it’s believed that the deal will undergo, one can by no means say by no means. Naysayers opine that if the merger of ZEEL and Sony falls via, Viacom18 is likely to be within the Punit Goenka-led media group because it was two years in the past. ZEEL’s internet revenue elevated 9 p.c to Rs 123 crore in Q2, FY24 grew from Rs 112 crore in Q2, FY23.

Meanwhile, The Walt Disney Company India has been struggling to take care of profitability. The firm’s internet revenue shrank 30.62% to Rs 1272.15 crore in FY23 from Rs 1833.81 crore in FY22, as per regulatory filings sourced by Tofler, a enterprise intelligence platform. Bob Iger, CEO, The Walt Disney Company, emphasised the deal with digital platforms, through the analyst name. The merger between ZEEL and Viacom18 would go away Sony in a precarious scenario. Disney has been weighing strategic choices for the enterprise together with an outright sale or establishing a three way partnership, as reported by Bloomberg. Disney Star just lately misplaced the streaming rights for the Indian Premier League (IPL) to Viacom18. It retained the digital rights of ICC cricket occasions for 4 years. The merger of Sony and Disney Company India would lead to an entity with world attain and significance. Sony would get entry to sports activities content material choices of Disney Star India just like the English Premier League and ICC cricket tournaments in addition to its leisure choices. In distinction, Disney Star would get entry to sports activities choices like Champions League soccer in addition to its actuality TV leisure choices. If the entities do merge, each firms would even be merging two of the most important movie studios. Moreover, the entities would have entry to one another’s digital streaming platforms, specifically SonyLiv and Disney+Hotstar.

Disney Star has inked a non-binding pact with Mukesh Ambani’s Reliance Industries Limited for the meantime, as reported by Economic Times.“ The entry of global tech giants such as YouTube, Meta, Netflix, and Amazon has played a pivotal role in expanding India’s video market, now estimated at US$13 billion. It is noteworthy that the combined market share from the two potential mergers will be less than 40% of the total video market. Nevertheless, it is imperative for traditional and domestic companies to join forces and leverage their local IPs to thrive in the new age of streaming,” Shah famous.

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