Zee Entertainment shares witnessed a more than 3% decline on Thursday, extending the losses from the previous session. The stock dropped by as much as 3.58% to ₹156.20 per share on the BSE.
In the prior session, Zee Entertainment Enterprises had experienced a significant decline of 6.36%. Over the past three months, the stock has plummeted by over 37%, and year-to-date, it has fallen by 43%.
The downward pressure on Zee shares intensified following the collapse of its proposed merger with Sony Group’s India unit.
Adding to Zee’s challenges is the recent announcement by Reliance Industries Ltd (RIL), led by billionaire Mukesh Ambani, about entering into a strategic joint venture with global media giant Walt Disney Co. This joint venture aims to merge Viacom18 and Star India, potentially posing further difficulties for Zee.
RIL and Walt Disney announced definitive agreements on February 28 to merge their media operations in India, forming a ₹70,352 crore-media conglomerate. RIL’s substantial investment of close to ₹11,500 crore ($1.4 billion) into the joint venture is primarily aimed at expanding the over-the-top (OTT) business. Reliance, along with its affiliates, will hold a majority stake of 63.16% in the combined entity, with Disney holding the remaining 36.84% stake.
Industry analysts predict that this deal could negatively impact Zee and other players in the industry, as they would face stiff competition from the newly formed entity.
The merger between RIL and Disney is set to create a broadcasting powerhouse with a significant share of the advertising market. With a vast channel portfolio and aggressive expansion in the OTT space, the new entity is likely to attract both content producers and advertisers, further weakening Zee’s competitive position.
Emkay Global Financial Services expressed concerns over Zee’s future prospects, emphasizing that the deal reduces its potential suitors and weakens its bargaining power. The brokerage firm maintains a ‘Sell’ rating on Zee Entertainment shares with an unchanged target price of ₹165 per share, while maintaining an ‘Add’ rating on RIL.
As of 11:30 am, Zee shares were trading 2.62% lower at ₹157.75 per share on the BSE.
Disclamer: LegalParivar.Com advises users to check with certified experts before taking any investment decisions.
