The merger of Zee Media of India and a local Indian affiliate of Japan’s Sony Group Corp is set to create a television behemoth that would be able to capture more advertising income, according to industry experts, while also posing serious competition to Walt Disney Co in a crucial growing market.

Armed with about 75 news, entertainment, sports, and movie channels in more than ten languages, the Sony-Zee partnership is poised to become the largest player in the segment in India and have a combined market share of 27 per cent, which would be well over that of Disney’s Star India, which is at 24 per cent.

“This will give them significant distribution muscle and an ad wallet,” Uday Sodhi, a former Sony Digital head in India, said. “They will become a formidable force.”

It is estimated that a total investment of $1.6 billion in its domestic subsidiary would be made by Sony in order to enhance the prospect of the new merged company according to the deal, which will be finalised after 90 days of exclusive negotiations. Sony in turn will also acquire a controlling stake in Zee.

According to the two companies, the investment from Sony will improve the merged company’s digital platforms as well as its capacity to bid for broadcasting rights in the fast-growing sports market.

“For the first time there’s a viable challenge to Disney (in India),” a former Disney executive was quoted in the media as saying without revealing the identity of the executive.

Star India network, Disney’s Indian television subsidiary has dozens of popular entertainment and sports channels.

No comments from Disney were available on this issue.

Both the companies have long been active in India, a market in which – according to KPMG’s estimates, the television entertainment business would be worth $10.5 billion by 2020.

According to the companies, the planned merger will bring together their networks, digital assets, production processes, and programme libraries.

With a population of 1.4 billion, India promises opportunities on a scale that few countries in the world can match. There are currently an estimated 900 million television viewers, the majority of whom are obsessed with cricket and sports, as well as theatrical romantic dramas.

According to the CEOs, sports is a crucial battleground.

According to the former Disney executive quoted in a few reports, as well as three others, the amalgamated new entity will have a greater possibility of attracting strategic investors or raising cash to bid for big event rights, such as the Indian Premier League (IPL) cricket competition.

Disney’s Star spent $946.75 million for the rights to India’s international and domestic cricket matches from 2018 to 2023, and paid $2.22 billion for the global IPL rights from 2018 to 2022.

Some of these rights will be auctioned off next year.

Both the two companies – Sony and Zee have online digital streaming platforms that jointly will compete with Disney+ Hotstar, thereby increasing rivalry in a market gthat is dominated by Netflix and Amazon.

(Adapted from MoneyControl.com)