Sony and Zee to bid for Indian Premier League rights as part of merger
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Sony and Zee Entertainment are preparing to enter the bidding for Indian Premier League cricket rights this month as part of a merger between the Japanese and Indian companies, according to people familiar with the matter.
A Sony-Zee bid for the 2023-2027 media rights for one of the world’s most valuable sports competitions would set up a battle with existing holder Walt Disney, which owns rival Indian media company Star India.
Other potential bidders include Facebook, which bid for the rights in 2017, Amazon and Mukesh Ambani’s Reliance Jio. The Board of Control for Cricket in India, the IPL’s governing body, said this week that it plans to release the tender in late October.
“Definitely sports is one area which shall be looked upon keenly. It will not only widen our target audience, but also enrich our content offerings on digital platforms,” Vikas Somani, head of mergers and acquisitions at Zee, told the Financial Times.
“With the cash infusion as proposed in the transaction terms, it gives us the firepower to go and bid competitively for these premium sports properties.”
The proposed merger was announced last week as India’s largest listed entertainment group faces a shareholder revolt led by Invesco, the US fund that wants to overhaul the board and force out chief executive Punit Goenka.
The deal has not yet been finalised but would create the largest media group in India, with everything from television channels and studios to streaming. The two groups would control 27 per cent of India’s media market, according to brokerage Edelweiss.
Sony would take a 53 per cent stake in the combined entity and invest nearly $1.6bn, which Goenka and other executives say will be used to acquire content including sports.
“It’s an important deal at a very critical time when the India market is migrating from TV to digital. Sports are a huge, huge part of that,” said one person familiar with the deal. “In the longer term, [it’s] very possible that what we are putting together in the India market becomes the core of a Netflix-style streaming service.”
India is a fast-growing entertainment market and the IPL is one of its most valuable assets. The two-month, short-format cricket tournament takes place every year, attracting the world’s biggest stars. Global and Indian companies line up to sponsor or advertise during matches.
The IPL rights, which sold for $2.6bn in 2017, are expected to go for at least 25 per cent more this time, according to Santosh N, a managing partner at financial consultancy Duff & Phelps.
Sony has a sizeable sports presence in India, broadcasting everything from international cricket matches to the Champions League football competition. The company acquired Ten Sports Network from Zee in 2016 and previously held the IPL rights before losing out to Star in 2017.
Santosh said the deal with Zee would create a more competitive buyer. “With [Sony and Zee] joining hands, they have a very good bouquet of general entertainment and sports channels . . . making it a very compelling bidder,” he said.
Satoshi Sakae, an analyst at Daiwa Securities, said the merger would allow Zee “to beef up its currently thin sports content”.
But the Sony-Zee deal may not proceed as it is currently structured. Invesco, Zee’s largest shareholder with a nearly 18 per cent stake, this week took the company to court to force an extraordinary general meeting in its effort to remove Goenka.
Some investors have been frustrated with what they consider Zee’s underperformance and poor corporate governance under Goenka, whose father launched the company in 1991.
A lawyer for the shareholders said in court that they were not against the proposed merger but felt that it should be considered by a “proper board”.
Sony declined to comment and referred to a statement on September 22 announcing the proposed merger with the Indian company.
Additional reporting by Amy Kazmin in New Delhi