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The journey of the merger of the two media conglomerates – Zee and Sony – has been nothing short of a roller-coaster ride. The merger was earlier planned to take place by the end of 2023 but the $10 billion deal is yet to be finalised with several hindrances keeping the two entities on their toes.
While on one hand Zee Entertainment Enterprises Ltd (ZEEL) has been dodging and braving the legal storms, Sony Pictures Network India (now Culver Max Entertainment Pvt Ltd) has pulled up its guards, to keep away from any trouble.
The merger agreement, which was entered into in 2021, was to be concluded by September 2023, but was later pushed to December 22, 2023. The fate of the merger is still uncertain with some industry insiders predicting the merger to finally happen by February 2024, although some say it will not happen before April 2024.
Reportedly, Sony Group is keen to place its India CEO NP Singh as the Chief Executive Officer of the merged Zee-Sony entity in the wake of SEBI barring Zee MD Punit Goenka from holding any key managerial positions. However, the ban on Goenka has been lifted by the Securities Appellate Tribunal (SAT), but the SEBI investigation is still on.
Recently, ZEEL informed the Bombay Stock Exchange (BSE) that it has requested Sony to extend the timeline to complete the merger, after which Sony issued a statement saying it has not agreed to Zee’s request and that it wants to hear the latter’s proposals and plans to complete the remaining critical closing conditions. Subsequently, on December 20, ZEEL informed the BSE that Sony has agreed for a discussion on the merger deadline extension. Zee and Sony now have one month to close the merger.
From when it all began
The journey of the merger began in December 2021 with ZEEL’s Board of Directors considering and approving the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013 (Scheme), whereby the Company and Bangla Entertainment Private Limited, an affiliate of Culver Max Entertainment Pvt Ltd (formerly known as Sony Pictures Networks India Private Limited), shall merge in Culver Max Entertainment Pvt Ltd.
After getting the requisite approvals and NOCs from shareholders and certain regulators, including SEBI and the Competition Commission of India (CCI), the company filed a petition with National Company Law Tribunal (NCLT) for approval of the scheme.
Throughout the year 2022, several creditors of Zee, including IndusInd Bank, IDBI Bank, Axis Finance and others moved the NCLT seeking initiation of insolvency proceedings against ZEEL claiming huge loan default.
While IndusInd Bank alleged a default of over Rs 80 crore against the media conglomerate, IDBI Bank, Axis Finance and others allegedly wanted to recover dues of over Rs 100 crore from the company.
On July 11, 2023, the NCLT reserved its order on the merger and on August 10, it allowed Zee-Sony merger after dismissing all objections raised by several creditors including IndusInd Bank, Axis Finance, JC Flower Asset Reconstruction Co., IDBI Bank, IDBI Trusteeship and Imax Corp.
Parallelly, both Goenka and Subhash Chandra were embroiled in another legal tussle with market regulator SEBI over the alleged siphoning of funds for their own benefit from the listed company.
On June 10, SEBI barred Goenka and Chandra from holding any key managerial positions in the merged Zee-Sony entity, which came as a blow to Zee while the process of merger was still on. The market watchdog had said there was prima facie evidence against Goenka and Chandra.
However, on August 10, Goenka approached the Securities Appellate Tribunal (SAT) against the SEBI orders and over two months later, on October 30, SAT paved the way for Goenka to continue as the Managing Director of the merged Zee-Sony entity while setting aside the SEBI imposed ban. However, the SEBI investigations against Goenka still continue.
Amid all this, the merger missed the September deadline, compelling Japan’s Sony Group to issue a statement on September 29 that the merger will be delayed by a few months.
Concerned over the implications of SEBI’s lens on Goenka, in November, Sony Group expressed its keenness to place its India CEO NP Singh as the Chief Executive Officer of the merged Zee-Sony entity.
A few days later, in an earnings call, Goenka said that his company is in active engagement with Culver Max (Sony Pictures Networks India) over the merger and that he recognises the value the merger holds.
As December was passing by and there was no sign of closing on the merger, Zee informed BSE on December 17 that it has requested Sony to extend the timeline to complete the merger.
Two days later, Sony issued a statement that it has not agreed to Zee’s request for extending the timeline. The company said it wants to hear Zee’s proposals and how they plan to complete the remaining critical closing conditions.
Next day Zee informed BSE that Sony has agreed to have a discussion in the matter.
The Culver Max Entertainment Private Limited (CMEPL)- formerly known as SPNI’s operating revenue for FY23 was Rs 6684.9 crore. The network runs 26 TV channels, a streaming platform- SonyLIV, and Studio NEXT- independent production venture for original content and Sony Pictures Films India.
Whereas ZEEL operating revenue for FY23 stood at Rs 8087.9 crore. The network has 50 channels in 11 languages, a streaming platform - Zee5, film production company- ZeeStudios and a music arm- Zee Music.
As earlier reported by e4m, if the merger takes place, the merged companies will own over 70 TV channels, two video streaming platforms – ZEE5 and Sony LIV – and film studios – ZEE Studios and Sony Pictures Films India – with a market share of 26%.