Zee-Sony merger: Zee says break-up buzz is baseless 

Soon after media reports claimed that Sony is planning to call off its mega $10 billion merger with Zee Entertainment Enterprises, the latter denied all claims in a regulatory filing. "Company is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger,” Zee said.

If it goes through, the merged entity will take on global giants like Netflix, Amazon Prime Video, Disney+ Hotstar and local incumbents like JioCinema. Last week, Sony Group hinted that it may cancel the deal with Zee Entertainment more than two years after it was announced due to a disagreement over whether its CEO Punit Goenka should lead the merged entity, according to reports.

As per the agreement signed in 2021, Goenka would lead the new company, but Sony has not been pleased with the ongoing regulatory probe against Goenka.

Last year, the Securities and Exchange Board of India (SEBI) had barred Essel Group chairperson Subhash Chandra and Punit Goenka from holding the position of a director or key managerial position in any listed company. The duo was accused of abusing their position as directors of a listed firm for siphoning off funds for their own benefit. On Tuesday, Zee called the allegations of the merger not going through "baseless and factually incorrect.”

“The company has always complied with its obligations under the SEBI Regulations, 2015 and "will continue to make disclosures in accordance with the same,” it said. However, Zee has missed a deadline to pay $200mn to Disney India unit for TV rights of ICC cricket matches. Zee didn’t pay the instalment due early January citing a cash crunch, experts say. The tranche was part of the over $1.4 billion that Zee agreed to pay for the license agreement signed in August 2022.

“The merged entity is equally important for both parties. It’s a high possibility that the merger will go through. The next few weeks are critical to understand the outcome of the ongoing negotiations,” an entertainment industry expert said.

According to Elara Capital, the final outcome of negotiations and terms of the deal could come over the next three weeks before 21st Jan’24. “Zee has a cash balance of mere $74mn currently and may not pay the advance amount to Disney, until the final negotiations end with Sony. We don’t foresee that the delay of advance payment of above is due to the Zee/Sony merger not going through, as both parties continue talks/negotiations,” it said.

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