Zee-Sony Merger - Turning Into A Dominant Media Player: Motilal Oswal
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Motilal Oswal Report
Zee Entertainment Enterprises Ltd. announced completion of the due diligence and final contours of the deal. Sony and Zee’s promoters will hold 51%/4% in the merged entity, while the rest will be held by the public.
There will be a fresh capital infusion of Rs 113 billion ($1.6 billion) by Sony, including the Rs 11 billion as non-compete fee to Zee’s promoters, which will be utilised to increase its stake to 4% from 2% in the merged entity.
The merged entity is valued ~17 times FY20 enterprise value/Ebitda and 22 times price/earning. On a SoTP basis, the merged entity’s linear business is estimated to be valued at 11-12 times EV/Ebitda, with a negative value for the over-the-top business.
The combined entity will be a leader in the broadcasting space, with a strong war chest for intensifying its OTT foray and an investment similar to that made by Netflix on its India content.
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