Sony, media baron from Japan, has decided to invest US$10 Billion in ZEEL or ZEE Network and merge both the entities. The proposal has been issued by both the companies in 2021. They both have agreed to honor and complete the merger by deadline, December 2023. ZEE management has asked for 30 days grace period extension. Recently, Sony has announced withdrawal from the deal.
Sony has reasoned that ZEE failed to compel to the deadlines to complete the merger. Inside reports state that the stalemate about who should be CEO of new entity Sony – ZEE, has caused for this final minute pull out. Sony is unhappy to let current CEO of ZEEL, Punit Goenka, to continue as CEO of Sony – ZEE and they want their CEO, NP Singh to head it.
SEBI has taken action against Punit Goenka banning him from holding any high positions as a result of an investigation about misdirection of funds in the organisation. Sony doesn’t want Punit to head the new entity but Punit doesn’t want to lose his position. Hence, Sony took the decision and asked ZEE to give them US$90 Million as compensation.
Now, ZEEL wants to ensue a legal battle as they have spent more than Rs.366 crores over the deal. They want to sue Sony for unilaterally taking a decision to withdraw from the deal. As Mukesh Ambani is gearing up to close Jio or Viacom18 and Disney India merger, this seems to help him more in creating a huge monopoly in Indian Broadcasting industry.
Sony – ZEE, if merger deal went through, could have been a huge network with 75 broadcasting channels and with Sony’s deep pockets, they could have developed into tough competition for Viacom18 – Star/ Disney. Rather they are now going for a long legal battle for the funds both of them spent in bringing this deal to life.
More than Sony, this fallout has effected ZEE. Their stock prices have fallen down to record lows and major trade analyst companies have downgraded the stock value to SELL, as well. Already, ZEE is said to be running in troubled waters and this fallout will further impact their liquidity and financial stability for sure.