Sony has officially called off its merger plans with Zee Entertainment. The decision puts an end to the $10 billion venture aim at establishing a major entertainment entity in India.
As Sony issue a termination notice to Zee, citing unmet conditions by the 21st January 2024 deadline.
Leadership concerns prove a major sticking point, with Sony unwilling to retain Punit Goenka as CEO amidst ongoing regulatory investigations into alleged financial misconduct.
Sony also express concerns over Zee’s financial health, particularly its declining operating revenue and a significant drop in earnings in fiscal 2023.
These financial woes were attribute to increase streaming costs and a weak advertising market.
Sony said that the necessary conditions for the merger weren’t met by the set deadline of 21st January 2o24.
So, Sony reaffirm its commitment to expanding its presence in India.
While, Zee disclose that Sony had demand a $90 million termination fee, citing alleged breaches of the merger terms.
Zee strongly denied these allegations and said its readiness to take legal actions to defend its stakeholders’ interests.
This deal had trouble from the start, marred by regulatory investigations into allegations of financial misconduct involving Punit Goenka and his father, Subhash Chandra, the founder of Zee.
Both have denied these allegations.
Sony had remain committed to the merger until recent developments.
Despite the termination, the possibility of renegotiating the deal hasn’t entirely rule out.
Tensions escalate last month when Zee could not meet a 21st December 2023 deadline to finalize the deal, leading to further delays and boardroom changes.
As talks continue past the deadline, no resolution was reach.
Despite the fallout, Zee’s share prices had risen by 35% since June 2023, fuel by optimism over the merger.
But market analysts caution that this uptrend could reverse with the deal’s collapse.