A game of bluff scuttled Sony-Zee’s plans to create $10 billion media giant
Sony Group Corp.’s lawyers got a nasty surprise during a routine call from the legal team of Zee Enterprises Entertainment Ltd.
Nearly two years into tortuous merger negotiations to create a $10 billion Indian entertainment giant, Zee wanted the Japanese company to agree to a so-called “hold harmless” clause for its Chief Executive Officer, Punit Goenka, just weeks before the Dec. 21 deal deadline.
Already wary of Goenka, who had been accused of financial impropriety by India’s markets regulator several months earlier, Sony executives wondered why he requested indemnity.
On his part, Goenka was worried that Sony would start a witch hunt against him after the merger was completed and it got what it wanted: access to Zee’s deep library of local entertainment content.
The account of this weeks-long stalemate was pieced together by speaking to people familiar with the matter who asked not to be identified as the talks were private.
Sony-Zee: How and why curtains fell on a mega media deal that was two years in making
Goenka was refusing to relinquish the CEO role of the merged entity, and Sony no longer was willing to move forward with him at the helm. By Jan. 19, when Sony’s board members met in Tokyo, the deal was dead in the water. A 62-page termination letter was sent to Zee on Jan. 22, citing non-fulfillment of some pre-requisite conditions outlined in the merger pact.
Disproportionate Influence
The aborted deal underscores the challenges facing foreign companies attempting to crack the biggest entertainment market in Asia. A culture gap and the disproportionate influence that India’s founding generation of company honchos still wield over their companies continue to stymie those wanting access
