Can you explain the contours of the deal with Sony and its objectives?
Both Zee and Sony have linear area operations in India. Both have got OTT and production studios. There is a whole lot of infrastructure. Now if it is combined, possibly there are areas where their strengths can be taken into account. Obviously the synergy between the two can expand the reach, get an increased market share and may result in more revenues. Obviously that will be a good deal for both set of shareholders. All these factors will be taken into account. We are now going to do a due diligence study within the stipulated time and then we will have to go back to the shareholders with our findings and the shareholders will have to approve it if they think it is a good deal for them.
Do you have any concerns about shareholders’ approval considering that one of the large shareholders, Invesco, has had doubts about the board and about the continuation of Mr Goenka. Do you think that this new deal changes the context?
I do not know. I do not have a clear answer to what you are saying at this point in time but I can tell you that the market has reacted very enthusiastically to the news and it is a little funny when one says Mr Goenka should not be there and another says yes he should be there for five years. It is probably the perception of the company and who is a good person and has delivered results and increased shareholder value. One needs to see how the shareholders are going to look into all this and then take a call.
But do you see any kind of challenge in getting the shareholders on board with this decision?
It is too early to say. If the benefits of this particular step is recognised or if in due diligence they turn out to be true, there should not be any issue. The shareholders today have reacted based on the fact that probably the due diligence would be okay. Once those things are identified appropriately and if at that time, the shareholders see value in this merger, they will certainly take what is beneficial to them. It is for them to see how they perceive this deal to be in their interest. Let us see.
What about the synergies between the Zee and Sony as they are strong in different spaces but there are some elements of overlap like two OTT platforms — Zee5 and Sony LIV, two production companies in the movie space. Do you envision some streamlining?
These are the matters which certainly will have to come into focus. Obviously the shareholder value has to be increased. These operations must be made more efficient which would mean synergising the operations. A lot of things have to be looked into. The deal has been worked out initially based on certain understanding and certain numbers. During the due diligence period, all these issues will certainly be addressed. And then we will have to recommend to our shareholders, and they will have to recommend to their shareholders and both set of shareholders have to agree. So it is a process, it will take time.
ET Now: Would the process and the actual execution have to include rationalising costs including employee costs?
R Gopalan: It is too early to say. It is possible that with the existing employees there could be better turnout of events, programmes. The number can get increased which can result in good revenue and therefore the cost of having all of them can also get neutralised or rationalisation can also take place. All I am saying is that it is too early to make a guess. All these things will be looked at in a very proper way so there is maximisation of benefits of the shareholders.
What will be the name of the new entity? Will you retain the brand name of Zee or of Sony?
Zee is merging with Sony. That is what the deal is.
So the brand name of Sony stays and Zee does not?
I do not know whether there has been any discussion on that or not. All I can tell you is that there is a merger of Zee with Sony and that will be the correct thing to do. Sony’s name obviously will be there. Let us not jump the gun at this point in time. It is only today we have done the whole thing and I hope there is still time to look into all this.