Sony formally withdraws agreement to merge India operations with Zee from NCLT

.Sony has withdrawn the agreement to merge its India operations with Zee Entertainment Enterprises from NCLT, taking the final step in scrapping a two-year-old plan that sought to create a $10 billion media giant.

The Japanese entertainment firm made multiple filings to the NCLT to pull out of the merger pact with Zee. 

While the court filings officially bring the curtain down on the long-drawn saga that was beset by delays, drama over who’ll lead the merged entity and a regulatory probe on Zee’s founders, legal wrangles will likely continue. 

Sony had sent the termination notice to Zee on Jan. 22 for failing to meet the merger agreement conditions and sought $90 million in break-up fees. Zee “categorically” denied that it had breached the pact announced in December 2021. 

The deal collapse has also left both companies more vulnerable while their rivals bulk up. Reliance Industries Ltd. and Walt Disney Co. announced a merger of their India media businesses on Wednesday, creating a $8.5 billion behemoth that will be the largest broadcasting and digital company in the world’s most-populous market.

The Reliance-Disney combine will hurt other industry players, including Zee, as they would have to compete with a much larger entity, Pulkit Chawla, a sector analyst with Emkay Global Financial Services Ltd. wrote in a report Thursday. “Content producers and advertisers are likely to gravitate toward the Reliance-Disney entity, which will also cater to the largest set of audience,” Chawla wrote. 

Earlier this week it was reported that Sony’s local unit and broadcaster Sun TV Networks have begun initial talks on buying a strategic stake in Arha Media & Broadcasting, which runs the video platform Aha. Sony denied it later, calling it an unfounded speculation.