Viacom, Zee Entertainment Merger Buzz Gathers Steam

The merger will result in the largest number of TV channels and have the largest market capitalization in India from the industry.

Representational Picture (AFP)

Mumbai: Viacom18 Media Pvt. Ltd, the owner of the Colors general entertainment channel, and Subhash Chandra’s Zee Entertainment Enterprises Ltd are aiming to merge paving the way to one of the biggest mergers in the television industry that could create a large media firm.

The merger will lead to the creation of the largest media firm with interests spanning from broadcast, OTT, live entertainment, and movie production, as per the business publication Mint.

What are the two entities looking to merge?

Viacom18 is a joint venture formed between TV18 Broadcast Ltd (51 per cent) and US-based ViacomCBS Inc. (49 per cent). TV18 is a unit of Network18 Media and Investments Ltd, the majority-owned by Mukesh Ambani’s Reliance Industries Ltd (RIL). It is to be noted that Zee Entertainment Enterprises Ltd, founded by Essel Group’s Subhash Chandra, is majority-owned by foreign institutional investors, including Investco Oppenheimer Developing Markets Fund and Ofi Global Fund China LLC. Essel Group’s equity holding is down to 3.9 per cent even as the company is headed by Chandra’s son Punit Goenka.

What are the other details of the deal?

As per the report, the merger is expected to take place through a share swap deal, and the discussions have begun a few weeks ago, and the deal is unlikely to involve any cash transaction.

As per the source in the report, the merger will result in the largest number of TV channels and have the largest market capitalization in India from the industry. At present, Zee has a market value of Rs21,300 crore. Network18 stock is trading at Rs52.05 with a market cap of around Rs5,500 crore.

If the deal goes through, the promoters of Viacom18 could become among the largest shareholders of the combined entity as more than 65% of ZEEL is owned by foreign institutional investors.

It is expected that the deal may be cleared only after the share price of ZEEL moderates by 15-20 per cent from current levels.

It is change in management control that may make the deal difficult to clear.

Checkout how Twitteratis have reacted to the merger talks