Sony Is In Talks To Merge With Reliance Join Venture Viacom18
Entertainment giant Sony Picture Network and Reliance Industries-owned ViacomCBS and Network 18's joint ventures Viacom18 are reportedly in talks for a merge to overtake Disney+ Hotstar and other India's digital entertainment platforms. According to the sources, the two companies are said to be in the final stages of the talks and will soon announce the deal.
As per a senior media professional aware of the matter said that this deal was put over for some time as the Reliance chairman, Mukesh Ambani, who holds the Network 18 and Viacom18, was busy signing the deals with Facebook and others giants for subsidiary Jio Platforms. The media person also said that the deal wouldn't be in cash. It will include the stocks swapping.
If the deal finalizes, Sony will get a hold of 74% stake in the merged entity, whereas RIL and Viacom who are 51:49 JV partners in Viacom18 will reserve the remaining 26% stake- RIL will hold between 10-12%.
According to the sources, RIL only wants to get free from the responsibility of managing the entertainment business. It rarely wants its foot in the door to maintain a constant flow of content for Jio. RIL only wants to control the pipe but not want to create content.
Indian tycoon Mukesh Ambani has announced that Den Network and Hathway, the Cable TV assets, and the news channels will be merged under one entity. The agreement would just include Viacom's entertainment business, whereas Reliance would continue to run its news channels.
Now the question is, how the Sony-Viacom merger impact the media ecosystem? Over this, the media industry experts stated that the merging of Sony-Viacom could become an alarming competition for Disney-Star, specifically in the Hindi general entertainment (GEC) genre, which controls a significant portion of its revenue a broadcast network.
In the last year, the viewers and subscribers of Star Bharat and Star Plus have reduced, while Viacom's Colors has seen earning profits and viewerships well in urban and rural markets. Even Sony Entertainment Television (SET) has been consistently doing well in urban markets.
A former Disney-Star executive pointed out that Sony and Sab's Gross Rating Point (GRPs) when put together, are larger than Star Bharat and Star Plus. When added Colors to it, they would together become a potent force. It would quickly turn into more high advertising revenues.
Sony Pictures Network is more profitable alone. While the Disney-Star was not able to meet its revenue target in 2019 and the SPN India has become the most profitable media firm in 2019.
Over the revenue, former Disney-Star executive explained, Sony's struggle with revenue had reduced at the moment when they gave up IPL. Sony invested the money on its shows, which they used for paying the IPL. Alongside this, all its sports investments are low cost too. Since they haven't invested a considerable amount, its monetization risks are also lower.
Apart from becoming a force to stand within linear television platforms, the merger of Sony-Viacom would also lead to the collaboration of its respective OTT platforms such as Sony Liv and Voot, which to date have been non-starters compared to Netflix, Amazon Prime Video, or Hotstar.