Zee demands $90 million in termination fee from Sony's Culver Max and BEPL for failed merger deal

Zee Entertainment has announced that it has asked Sony Group Corporation's India media unit, Culver Max Entertainment and Bangla Entertainment Pvt Ltd (BEPL), to pay $90 million as part of termination fee. 

"Culver Max and BEPL have failed to comply with their obligations under the MCA. Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to $90,000,000, in accordance with the MCA," the company said in a filing to the exchanges on May 23. 

More than two years after announcing their proposed merger, Sony on January 22 announced the termination of the deal while accusing ZEEL of not meeting closing conditions even after extending their closing period by a month.  

ZEEL has maintained that it was willing to meet most of the conditions. 

The Mumbai bench of NCLT on August 10, 2023, approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment and BEPL, which could have created a $10 billion media entity. 

According to regulatory filings, Zee Entertainment incurred Rs 432 crore in merger-related costs during 2023-24 and 2022-23 on its failed merger deal with Sony Group Corporation's India media unit, Culver Max Entertainment. 

Sony Group Corporation had said ZEEL failed to satisfy merger conditions and also initiated arbitration proceedings before Singapore International Arbitration Centre (SIAC) claiming $90 million (around Rs 748.5 crore) as a termination fee. 

ZEEL had also initiated legal actions to contest the claims of $90 million filed by Sony Group before SIAC. 

Zee Entertainment had reported a profit of Rs 13 crore in the March quarter of FY24, after reporting a loss of Rs 196 crore in the year-ago period. However, sequentially the March quarter of FY24 remained muted. The company reported a profit of Rs 58.5 crore in Q3FY24.

It reported total income of Rs 2,185.29 crore, up from Rs 2,126.35 crore during the same period a year ago, the company said on May 17. The broadcaster's advertising revenue stood at Rs 1,110.2 crore versus Rs 1,005.8 crore in Q4 FY23. In FY24, Zee's ad revenue was marginally down to Rs 4057.7 crore from Rs 4057.9 crore.

Zee Entertainment Enterprise shares ended the day at Rs 148.60  down 1.75 percent on May 23.