Sony in Talks to Acquire Stake in India's Zee Entertainment

Zee Entertainment CEO Punit Goenka - P 2018
Courtesy of Zee Entertainment

The leading Indian media giant is reportedly also attracting interest from Comcast, Amazon, Tencent and Alibaba after its largest shareholder recently said it was looking to sell up to half its 42 percent stake to a strategic partner.

Sony Corp. is among the contenders who are in talks to acquire a stake in leading Indian media giant Zee Entertainment Enterprises, a source said, confirming a report by CNBC-TV18, the Indian joint venture of CNBC and Network 18. The report did not mention any price tag for a possible acquisition.

Quoting unnamed sources, the report added that NBCUniversal owner Comcast was also in the running to acquire a stake in Zee.

Sony is a leading TV player in India and runs a network of 29 channels offering anything from entertainment to sports. The company also runs the SonyLiv digital platform, which competes against Netflix, Amazon and Fox's Hotstar, among others. In addition, Sony is also active in local film production via its Sony Pictures banner.

Zee, Sony and Comcast weren't immediately available for comment. 

Last November, Zee said that its largest shareholder was looking to sell up to half its 42 percent stake to a strategic partner that can help it make a more global push and "transform the business into a tech-media company."

Promoted by the Essel Group, which is the largest shareholder in the company, Zee runs a diversified business that includes 37 channels that reach 170 countries. The company recently launched its streaming service Zee5. In addition to its media and entertainment holdings, Essel runs various businesses, from packaging to real estate.

Headed by leading businessman Subhash Chandra, Essel had appointed Goldman Sachs Securities India as investment banker and Lion Tree as an international strategic adviser on reviewing options for reducing its 42 percent stake in Zee by March or April.

A report in The Economic Times Friday also said that Sony was in talks with Zee. It said that top Sony officials, including Mike Hopkins, chairman of Sony Pictures Television, and Tony Vinciquerra, chairman and CEO of Sony Pictures Entertainment, had met Chandra after Zee first expressed an interest to sell an equity stake.

Quoting unnamed sources, CNBC-TV18 said that video giant Amazon may also enter the race to acquire the stake in Zee given its presence in India's fast-developing OTT market with Zee5. The report also said that Chinese giants Tencent and Alibaba have "also shown interest" in Zee5.

When Zee first expressed its intention to sell a stake, CEO Punit Goenka said that the group had "global ambitions" and was looking "to partner with the right entity that can take us to the world and help us transform from a pure content company to a content technology company that can ensure we are able to compete in this rapidly evolving digital world."

Following Zee's announcement, Macquarie Capital said in a research note that the company could benefit from a global partner to "plug gaps in Zee's media-tech prowess."

Back in 2016, Sony Pictures Networks India acquired Zee's sports TV unit Ten Sports Network for $385 million. The deal followed Sony's 2015 agreement with ESPN to launch the SonyESPN and SonyESPN HD channels. This marked ESPN's return to India after it ended its 18-year-old joint venture with the 21st Century Fox-owned Star India network in 2013.

Zee was established in 1992 and quickly became a market leader in the dominant Hindi entertainment space with its flagship Zee TV channel. Over the years, the company forayed into news and regional language broadcasting. It also launched English entertainment channel Zee Cafe offering popular U.S. shows, such as Big Bang Theory and Two and a Half Men.

While being a market leader at home, Zee also expanded abroad, offering its channels in about 12 languages targeting the big South Asian diaspora.