In terms of market capitalisation, Zee alone has a market cap of Rs 24,000 crore compared to Rs 15,000 crore of the merged Reliance entity.
Recently Mukesh Ambani consolidated the media assets of Reliance Industries, giving distribution a big push.
With this, the battle of supremacy between Ambani and Subhash Chandra, who straddle the media convergence space of broadcasting, distribution, over-the-top (OTT) channel, content, and movies, will only intensify.
Unlike other big international players such as Disney (which has only a minority stake in DTH Tata Sky) and Sony (which does not have a distribution company), Ambani and Chandra span the entire media convergence space.
Reliance announced the merger of its various content, distribution, and media properties in its listed subsidiary Network18.
The merger does not include media assets such as Balaji Telefilms, Eros International, or Saavn in which it has stakes, nor the Reliance Jio OTT platforms, which are outside the deal.
But the merger does include cable companies Hathway and Den Networks, which Reliance had acquired earlier and which will be merged into two wholly-owned subsidiaries of Network18.
The revenue of the proposed new consolidated entity is projected to be Rs 8,000 crore, much smaller than the Rs 15,400 crore revenue of Chandra’s Essel group’s media assets.
These include Zee Entertainment Enterprises, Siti Networks and Dish TV (which Essel wants to sell off).
Even in terms of market capitalisation, Zee alone has a market cap of Rs 24,000 crore compared to Rs 15,000 crore of the merged Reliance entity.
Nonetheless in this battle, Reliance enjoys some other key advantages that enable it to take on Essel.
It has a captive consumer base of 375 million mobile customers which it can tap for media services ranging from broadcasting to OTT and even fixed broadband at home.
Its stocks of cash are high and it boasts a stronger balance sheet.
In contrast, the Essel group has had a fraught time with the serious financial challenges it has experienced in paying back the debt it took to finance its foray into infrastructure, pledged with Zee shares.
Even after becoming a minority shareholder in the flagship company (with 5 per cent), Essel still has to pay over Rs 2,500 crore in debt.
It hopes to manage this by selling off half its stake in Dish TV.
According to CLSA estimates, the Zee network with around 23 per cent viewership share is a close second to Star at 26 per cent.
But the consolidated TV18 network share is around 12 per cent and has a large gap to fill.
However, JP Morgan has estimated the consolidated company to have a 13 per cent share of viewership and Zee insists that its share stands at 18.2 per cent.
What’s more, given the launch of new channels in Bhojpuri and Punjabi among others, Zee’s share should inch up even further.
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