Sony’s Indian branch has abandoned plans for a $10 billion merger with Zee Entertainment, intended to create one of India’s largest entertainment conglomerates.
The merger, announced two years ago, aimed to unite over 75 television channels, film assets, and two streaming platforms.
Sony cited unmet merger conditions as the reason for the withdrawal, but reports suggest a leadership dispute may have played a role.
Zee Entertainment expressed the possibility of legal action against Sony and refuted claims of breaching merger terms.
The deal’s closing date was set for January 20, but Sony stated that conditions were not satisfied by then.
Originally, Zee’s CEO, Punit Goenka, was to lead the merged entity. However, Sony reportedly objected to this after India’s market regulator initiated an investigation into Goenka.
Zee stated that Sony was seeking a $90 million termination fee for alleged breaches, a claim Zee vehemently denies.
Zee asserted that it followed the agreed-upon Merger Cooperation Agreement and is now exploring available options, vowing to protect stakeholders’ long-term interests, including potential legal action.
The collapse of the deal could negatively impact both companies, as they sought to expand in India’s digitally evolving market amid rising competition from platforms like Netflix, Amazon, and Hotstar.
The merger was also considered crucial to creating a competitive force against the planned merger of Disney’s Indian businesses with the media assets of Reliance Industries.
Karan Taurani, an analyst at Elara Capital, noted the potential ramifications, stating, “A deal collapse will have a negative impact on both parties as they were looking at scaling up in the Indian market which is going through a digital disruption and a potential threat of increased competition intensity if the Reliance-Disney deal goes through.”
Source-BBC
