Zee invested Rs 432 crore towards failed Sony merger

Delhi: As per official records, Zee Entertainment allocated Rs 432 crore towards merger-related expenses spanning 2023-24 and 2022-23, attributed to its unsuccessful merger endeavor with Culver Max Entertainment, the Indian media division of Sony Group Corporation.

Reportedly, the company incurred Rs 256 crore in merger-related expenditures during 2023-24 and Rs 176 crore in the preceding fiscal year, as outlined in the filings.

If the merger had carried through, it would have been India’s fourth largest media company after Google, Meta and Star. 

Sony formally terminated the merger on January 22, 2024. The termination came after a deadlock between the firms regarding the leadership of the combined entity. Sony had reportedly objected to the condition in the term sheet to appoint Zee CEO Punit Goenka as CEO of the merged company amid an investigation into his conduct by India’s capital markets regulator.

Sony issued the termination letter following the conclusion of a 30-day grace period. During this time, the two parties were unable to come to an agreement on a deadline established in late December.

In fulfilling the merger conditions, Zee shuttered several operations in 2022-23, such as Margo Networks, leading to Rs 331 crore in impairment charges. The company stated that the effect on its consolidated outcomes amounted to Rs 98 crore in 2022-23, as the losses from the closure were recorded in earlier financial reports. Moreover, Zee indicated that the obligation to finance the closure is projected at Rs 32 crore in 2023-24.

In September 2021, Sony Pictures Networks India and ZEEL entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and programme libraries. Subsequently, the two parties signed a definitive agreement for their merger in December 2022.

Sony had said ZEEL failed to satisfy merger conditions and also initiated arbitration proceedings before SIAC claiming $90 million as a termination fee, which was eventually rejected. 

On the other hand, ZEEL filed a petition before the NCLT, seeking a direction for Sony group to implement the merger. ZEEL also initiated legal actions to contest the claims of $90 million filed by Sony Group before SIAC.