Why Sony-ZEE merger is at risk of collapse
The potential $10 billion merger between Sony's India unit and ZEE is in jeopardy as the December 21 deadline approaches, per a Bloomberg report. Leadership disputes and unresolved merger details threaten the creation of a media giant if the duo fails to reach an agreement by the said date. Meanwhile, Insiders told Bloomberg that the outcome could be determined as early as next week.
What's the disagreement between Sony, ZEE
One of the primary concerns is the proposed appointment of ZEE's CEO Punit Goenka, son of its founder, as the head of the merged entity. While ZEE is pushing for Goenka's appointment as per a 2021 agreement, Sony is hesitant due to an ongoing regulatory inquiry involving him. This has created a last-minute conflict in the two-year-old merger plan that has already seen a fair share of drama and delays.
Accusations against ZEE
In June, the Securities and Exchange Board of India (SEBI) accused ZEE of fabricating loan recoveries to conceal private financing deals involving its founder, Subhash Chandra. The SEBI stated Chandra and his son, Goenka, misused their positions and siphoned off funds. However, an appellate authority later granted Goenka relief from the SEBI order, which had restricted him from holding an executive or director role in ZEE Entertainment Enterprises Limited. Sony views this ongoing investigation as a looming corporate governance concern.
ZEE 'actively engaged' in completing merger
On the other hand, ZEE has claimed to be "actively engaged" in completing all prerequisites for the deal, with most already fulfilled. The company also stated that it is in regular contact with Sony. If the merger deal goes through, it would hugely expand Sony's media presence in India, boasting over 75 television channels and a 37% market share.
Sony sticking to December 21 deadline
Sources told Bloomberg that Sony is not considering extending the December 21 deadline. The merger has nearly all necessary regulatory approvals and could still proceed if both parties resolve their differences quickly. They also have the option to request an extension from India's National Company Law Tribunal (NCLT). The Sony-ZEE merger aims to establish India's largest entertainment company capable of competing with global giants like Netflix, Amazon, and local conglomerates such as Reliance Industries.
