Mint Explainer: The collapse of the Sony-Zee merger and its wider implications

livemint.com:

Zee Entertainment Enterprises Ltd after snapping merger negotiations that would have created among India’s largest media networks. The unravelling of the deal will hurt both the companies, say experts, especially in the context of the ongoing talks for a merger of Disney Star with Reliance Industries-controlled Viacom18 Media Pvt Ltd. Disney Star is already India’s leading network, with more than a 30% share of the market.

Mint explains the wider implications of Sony’s decision to not go ahead with the merger after two years of negotiations. Sony Pictures Entertainment formally terminated its merger agreement with Subhash Chandra-led Zee Entertainment on Monday, bringing India’s largest-ever entertainment deal yet to a collapse after months of debate over the appointment of a chief executive officer for the merged entity. As per the original deal terms signed two years ago, Punit Goenka, the managing director and CEO of Zee, was supposed to head the merged entity.

However, on 25 April, 2023 the Securities and Exchange Board of India accused Chandra and his son Goenka of diverting at least ₹200 crore from Zee via certain promoter group firms. Goenka challenged the order before the Securities Appellate Tribunal, which set aside the order pending the completion of Sebi’s probe. The Japanese media giant, on the other hand, was pitching its India head, N.P.

Singh, to be the CEO of the merged entity. Goenka was opposed to this. Media and entertainment industry experts say following the termination of the merger, Zee will need a cash-infusion given its mounting debt and reducing margins.