We will be aggressive in sports acquisition independently as well as jointly: Punit Goenka
The ZEEL MD & CEO said the $1.57 billion cash coming into the ZEEL-Sony merged entity will be used for M&A, digital and sports acquisition
ZEEL MD & CEO Punit Goenka has said that the merger deal between the company and Sony Pictures Networks India (SPNI) is expected to conclude in 8-10 months. In the interim, both the companies will continue to function as standalone entities.
He also said that ZEEL will look at acquiring sports properties independently as well as jointly. The company recently re-entered the sports broadcasting business by acquiring UAE T20 League rights for 10 years for an estimated $150 million.
He further stated that Sony and Zee cannot come to any understanding till the merger process is completed. “We cannot come together for any coordination until the merger process is completed, and therefore, we will be considering bidding for sports, whether it be IPL or any other rights, as we have taken a conscious decision to enter back into the sports business," Goenka told analysts during a conference call on Wednesday.
“Having said that we will be aggressive in sports acquisition independently as well as jointly as and when the companies come together but keeping prudence in mind that eventually we have to deliver shareholders’ value,” he added.
On the $1.57 billion cash coming into the merged entity, Goenka said that this growth capital will be used for M&A, digital and sports acquisition. “The cash that is coming into the company will be utilised for multiple reasons which could mean further M&A opportunities in the digital space, it could mean bidding for premium content like sports, it could also accelerate our investment in the digital business.”
Goenka also stated that the value of film rights will not see a deceleration due to the Zee-Sony merger. “Bidding for film rights will not soften up because of one consolidation, but we will try to bring some rationality there as much as we can in our control,” he added.
The merger will bring synergies of 6-8% on both the revenue and the cost side. “We have total synergy of 6-8% with a large part of that coming from revenue and some part will come from cost. Our focus is more towards revenue synergy, and cost synergy will happen over a period of time," Goenka averred.
He added that revenue synergies come much faster while cost synergies take time to be realised. “6-8% synergy is for the first full financial year of operations where we will get the revenue synergies in place whereas cost synergies may take some more time to flow through.”
On the continuation of the two brands, Goenka said that the board of the merged entity will take a call. He also stated that both brands are equally strong in the marketplace. “With the merger, the brand Zee also gets merged into the new entity and will belong to the MergeCo. The board of MergeCo will have to decide which brands to keep and for how long. From my own intuition, both the brands are equally strong and with loyalty attached to themselves. The board will take a prudent call at the right time,” he said.
