In December 2021, when Punit Goenka announced the final contours of the deal to merge Zee Entertainment with Sony Pictures, he killed two birds with one stone. On one hand, the merger assuaged immediate concerns raised by mutinous Zee shareholders, and on the other, the deal has paved the way for a new leader to emerge in India’s broadcasting market.

Once the merger is complete, the Zee­-Sony duo will have a combined market share of 28 per cent, shooting ahead of Walt Disney- owned Star India, which has a market share of 24 per cent. Experts suggest that the broadcasting space at a national level is set for a three­way battle between Zee-Sony, Disney­-Star and the Network18­-Eenadu-Group­Jio trio backed by Mukesh Ambani’s Reliance Industries. At stake is a $23.7 bn market, which is projected to grow to $30.6 bn by 2023.

The upcoming auction for the broadcasting rights of the Indian Premier League (IPL) will perhaps offer the first glimpse into the intense rivalry between the three players. Star and the merged entity Zee­Sony will be neck and neck in the battle for market supremacy, while the buzz is that the Reliance juggernaut will put big bucks in play. While Sony has a sports portfolio that it had ironically acquired from Zee in 2016, experts say that its mix of sports programming fails to compare to Star.

Batting on cricket

Cricket is the prime mover for sports programming in India, and right now Star has the major broadcasting rights to all — IPL, BCCI (Board of Control for Cricket in India) and ICC (International Cricket Council) matches. Karan Taurani of Elara Capital said, “Sports is a market where the winner takes it all, either you are there or you are not there. Cricket has the lion’s share among sports and within cricket, Indian cricket is where there will be the most interest; and within India cricket, IPL will command most attention. Therefore, it is important for broadcasters to get their programming mix right if you want to bet big on sports.” “You can’t be a small player like Sony betting on non-cricket sports like Kabaddi, Olympics etc., and hope to compete,” Taurani adds.

The reigning philosophy in media and entertainment is that sports supremacy can deliver far reaching consequences, as is indeed the case with Hotstar, which holds a market share of 41 per cent, going by certain reports in the subscription video on demand market with streaming rights to IPL, BCCI and ICC events featuring India. However, given that broadcasting rights for all three are up for renewal by 2023, Disney Star’s supremacy in the digital platform space is on uncertain footing. Ajimon Francis, Managing Director of Brand Finance India told BusinessLine, “It will not just be Zee­Sony, that will challenge Star. You need to watch out for the Reliance Jio juggernaut. This year it’s going to be party time for the IPL central pool as Facebook (Meta), YouTube, Jio, Star, Zee-­Sony are going to fight tooth and nail to get media/streaming rights.”

Digital supremacy

According to industry watchers, bidders will be ready with a ₹40,000 crore auction purse and Star’s winning bid of ₹16,347 crore will easily be doubled. Digital platforms will not just invite competition from the top broadcasters. According to Jehil Thakkar, Partner at Deloitte, “It is not only about the broadcasting players with streaming app, it is a much larger landscape; you also have foreign players (like Amazon Prime). Given that we are still fragmented in the streaming space, we will see some consolidation in the medium to long term.” The fight is for sports content and the fight is also for digital supremacy. Abneesh Roy, Executive Vice President, Edelweiss Financial Services said, “On the OTT (over ­the top) front, Zee and Sony are individually weak, however a combined digital platform of the two will be second only to Hotstar.” A prospective Zee­Sony digital platform in a market dominated by the likes of Hotstar, Amazon and Netflix is likely to emerge as a major disruptor, because it will have it all.

“After the merger, their digital content library will be unparalleled, since they will have sports through Sony and content across every genre and every language. Since they are likely to enter the market with mass affordable pricing, a Zee-Sony OTT app will become a must ­have for consumers,” said Roy. On the traditional linear TV side, the New Tariff Order 2.0, which was introduced by TRAI, last year, with a lot of opposition from the broadcasters. According to the order, the rates of individual TV channels have been capped at ₹12 from the existing ₹19. This compels channels to sell outside bouquets, marketing, advertising; and content becomes paramount. Therefore the bigger you are, the more likely it will be that you succeed. “While investments will certainly go on the digital side, linear television broadcasting is where most of the revenue for the broadcasters lie. Therefore, you will also see investments into better programming and better distribution as a whole, in order to attract audiences. Marketing of these channels by broadcasters is going to become more important,” said Thakkar. Access to prime sports content will also be needed to stand out in the linear market. For consumers, the battle between Zee-­Sony, Disney-Star and Reliance could mean better programming and investment into interesting and niche content, as players fight it out for eyeballs.

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