Bisina SomtoSony Group Corporation has officially terminated its plan to merge its TV and streaming businesses in India with the popular Zee Entertainment Enterprises Limited (ZEEL).
The announcement came on Monday, as Sony stated that the merger failed to close by the specified end date due to unmet closing conditions.
Join our WhatsApp ChannelWhile Sony does not foresee a substantial impact on its consolidated financial results, the termination may come at a cost, with a reported $100 million termination fee to be paid to Zee under the original agreement.
The proposed merger aimed to bring together ZEE and Culver Max Entertainment, formerly known as Sony Pictures Networks India (SPNI), creating a colossal entity valued at $10 billion.
This merge would have encompassed over 70 linear TV channels, two video streaming services (ZEE5 and Sony LIV), and two film studios (Zee Studios and Sony Pictures Films India), making it a dominant player in India’s linear TV market and strengthening its position in the rapidly evolving Indian streaming sector.
The merger, initially proposed in 2021 and formalized in December of the same year, underwent a lengthy process of regulatory approvals.
Despite obtaining approval from the Competition Commission of India (CCI), stock markets NSE and BSE, shareholders, creditors, and the National Company Law Tribunal in Mumbai, the deal faced obstacles along the way.
A significant factor contributing to the termination was the controversy surrounding Zee Entertainment’s valuation and the leadership dispute. The Securities and Exchange Board of India (SEBI) had issued a scathing report accusing Zee founder Subhash Chandra and CEO Punit Goenka of self-serving practices and fund mismanagement.
Although Goenka’s executive ban was reversed in October, Sony reportedly remained uneasy about his leadership role, potentially violating Japanese corporate governance standards.
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Furthermore, Zee’s financial performance raised concerns. While the company’s revenues remained stagnant at INR 80 billion ($960 million) annually for the past five years, profits plummeted from INR 9.65 billion ($120 million) in the year to March 2022 to just INR 478 million ($6 million) in the year to March 2023. Zee also began the current fiscal year with a quarter of losses, indicating a worrisome trend.
The decision to walk away from the deal may also reflect the challenging dynamics of the Indian TV sector. Although the industry has rebounded post-COVID, it is not experiencing rapid growth, and new competitive threats have emerged.
Disney’s market dominance is now contested by Amazon’s Prime Video and Reliance Industries’ Jio, creating a highly competitive landscape.
Sony’s retreat from the Zee merger leaves the Japanese conglomerate with the task of either selling or expanding its Indian TV business. The strategic direction remains uncertain, but industry observers speculate that Sony might explore options such as negotiating with regulators for segments of the Jio-Disney combine or potentially returning with a fresh and possibly hostile takeover offer for Zee, leveraging its weakened position.
Somto is an Entertainment Reporter with a passion for uncovering the latest stories in the world of entertainment. As a dedicated journalist, Somto delivers in-depth reporting, exclusive interviews, and breaking news coverage.
She covers a wide range of topics, from celebrity interviews to industry trends and film reviews.
As an Entertainment Reporter for Prime Business Africa, She continues to provide comprehensive and insightful coverage of the entertainment industry, offering readers an insider's perspective on the latest developments and trends. She is a trusted source for breaking news, exclusive interviews, and thought-provoking analyses.
Somto is dedicated to providing valuable information and entertainment to her audience while upholding the highest standards of journalistic integrity.
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