Sony’s googly on CEO may stump Zee merger
Zee Entertainment Enterprises Ltd and Sony Pictures Networks India (SPNI) have stalled over the latter’s last-minute demand that its executive lead the merged entity instead of Punit Goenka as agreed before. According to two people aware of the matter, failure to reach an agreement by the 21 December deadline may derail the merger, the biggest in India’s entertainment industry.
In a scheme of arrangement signed on 21 December 2021, the two entertainment giants agreed that Goenka, currently managing director (MD) and chief executive officer (CEO) of Zee, will continue in the same position in the merged entity for five years. SPNI will own 50.86% of the merged entity, Zee’s promoters (Goenka family) will hold 3.99%, and the remaining 45.15% will remain with the public shareholders.
Since then, the Securities and Exchange Board of India (Sebi) has begun investigating Goenka and his father, Subhash Chandra, in a case of alleged diversion of funds. Goenka has received relief from an appellate court against a Sebi order barring him from taking any leadership position in listed companies; however, Sony views the allegations and investigation as corporate governance issues and wants to place its executive at the top, despite the National Company Law Tribunal (NCLT) approving the composite scheme of the arrangement.
“Even though there is no legal hurdle in naming Goenka as managing director and CEO, Sony is cognizant of the fact that there is an ongoing investigation, which may or may not result in his getting found guilty. But on its part, Sony wants to play safe and name its India managing director N.P.
Singh as the head of the merged company," one of the two people cited above said on condition of anonymity. A top Sony
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