Sony Terminates ZEE Merger Deal for Indian Assets

Sony Pictures Networks India (SPNI) has terminated the proposal to merge with ZEE Entertainment Enterprises (ZEEL) more than two years since the transformative agreement was first announced.

SPNI, the Sony Group subsidiary now known as Culver Max Entertainment (CME) agreed to a $10 billion merger with ZEEL in December 2021 in a move to create a local broadcasting powerhouse in India. The combined entity would have been the fourth-largest media group in the country. The end of the merger plan comes amid uncertainty over Disney’s Star business, with a tentative deal in the works to merge those assets with Reliance, whose portfolio includes Viacom18 and Jio Cinema.

“Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline,” said a statement from Sony. “After more than two years of negotiations, we are extremely disappointed that closing conditions to the merger were not satisfied by the end date.”

A regulatory filing from ZEEL maintains that CME is seeking $90 million in termination fees related to the merger breakdown. The ZEEL board denies allegations that terms of the deal were breached. “ZEEL has consistently worked towards the implementation of the mentioned scheme in the interest of the shareholders,” the company said. “ZEEL also held several deliberations and good faith negotiations with a view to consider an extension of the merger completion timeline that did not materialize.”

Per reports, leadership of the merged outfit was a major sticking point in the negotiations. ZEEL maintains that Punit Goenka, managing director and CEO, “was agreeable to step down in the interest of the merger and proposals in this regard were discussed.”

R. Gopalan, chairman of ZEEL, said, “We are evaluating the next steps and considering the appropriate course of action. The board has noted that the company took all the required steps in the course of its integration journey over the last two years to ensure that the scheme is implemented at the earliest. That said, the board would like to assure its stakeholders that the company will take all the necessary actions, in the best interest of all stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings. The board has complete faith in the highly experienced senior management of the company and will continue to guide the team. We recognize and value the trust our shareholders and stakeholders place in us, and we express gratitude for their continued support.”