Analysts Lower Zee’s Price Targets Following the Termination of the Sony Merger Deal

Citation: Image used for information purpose only. Picture Credit:

Analysts are pessimistic about Zee Entertainment Enterprises because to factors such as inadequate competitive positioning, corporate governance concerns, and unstable financial health; as a result, the projected $10 billion merger with Sony has been canceled.

On Tuesday, the first trading session following the revelation that the proposed Zee-Sony merger transaction has been halted, shares of Zee Entertainment Enterprises will be in the spotlight.

The majority of analysts have lowered their price targets and recommendations because they believe that the most recent development is bad for the Indian media and entertainment company.

The primary factor in the valuation increase during the previous two years was the merger with Sony. However, we downgrade (Zee) to Sell with March 2025E TP slashed to INR 170 from INR 340 due to the termination,” an Elara Capital report said.

However, TP may move to INR 130 claiming losses in the sports industry if the Disney contract is honored. We value OTT at 3.0x one-year ahead EV/sales and the broadcasting business at 10x one-year forward P/E. The report also stated that the prospect of any other strategic or financial partner purchasing the majority stake in Zee might give a break to the valuation multiples.

Elara Capital has reduced its target price from ₹340 to ₹170 and rated the stock to sell.

In a similar vein, Emkay Global has lowered its target price to ₹175 and downgraded the stock from buy to sell. According to the Emkay analysis, “… we downgrade the stock to Sell (from Buy) due to weak competitive positioning and escalated corporate governance issues.”

More than two years after it was announced, the $10 billion projected Zee-Sony merger deal was canceled. A combined company with 75 channels and a significant presence in regional markets, sports, and entertainment, it was envisioned as the second largest after Star and Disney India, in addition to two OTT platforms.

Remarkably, the agreement is said to have collapsed because of a deadlock on Punit Goenka, the CEO of Zee Entertainment Enterprises, leading the combined company while an inquiry was ongoing.