Zed Entertainment Enterprises Limited (ZEEL) is in a difficult situation where it needs to find another savior after Sony's India division called off the merger. At the same time, the digital onslaught is negatively impacting the linear TV business, and a much larger merger between Reliance Industries Limited (RIL) and Disney Star is in the works, which is expected to take the lion's share of the advertising revenues. According to Managing Partner Vivek Menon of NV Capital, "ZEEL's linear TV is already facing its share of trouble and the digital business requires a substantial amount of investment to keep up with the pace of growth." He also notes that they must strike the correct balance between growth and profitability.  

Brokerage company Elara Capital noted in a statement that throughout the previous two years, ZEEL's growth and profitability performance were subdued. The expected revenue increase for the fiscal years FY20 to FY24 was 2.2%, while the EBITDA margin dropped to 10.2% (9MFY24E) as a result of decreased growth in the linear TV segment and losses in the OTT segment. 

Additionally, Disney Star signed a unique sublicensing agreement with ZEEL in August 2022 to sublicense its TV rights for the 2024–27 ICC cricket tournaments. Because of high content expenses, a decline in sports ad revenue, and the availability of free cricket material on other OTT platforms, Elara projects an annual loss of Rs 1,520 crore for ZEEL in FY 2024–2025 and beyond. The estimated overall cost of the Disney Star bundled deal for TV+ digital in 2024–2027 was Rs 25,000 crore.

"This calendar year is when the tournaments will start. ZEEL will suffer because there is a significant amount of loss that needs to be written off if they uphold the contract. There are legal ramifications for Zed if they violate the terms of the Disney deal, said media expert and senior vice president Karan Taurani of Elara Capital.      

One of ZEEL's unmet needs that Sony would have taken care of if the merger had gone through was sports. According to Taurani, Zee's sports strategy is hazy at the moment, particularly for its digital platform, since the company only has roughly Rs 600 crore in cash reserves.     

"They urgently need to come up with a backup plan in the shape of a white knight to help them along the way since they will be facing numerous obstacles on several fronts," Menon says. As its biggest shareholder, the American company Invesco wanted the Goenka family out, and Sony ended up becoming their savior. However, since Sony has also decided to dissolve their relationship, ZEEL has returned to its previous state, albeit with additional legal disputes and the Reliance-Disney merger to deal with.