Sony Group is actively engaged in talks to merge its Indian subsidiary with Zee Entertainment Enterprises, with ongoing talks scheduled until January 20, sources familiar with the talks said, according to a report in Nikkei Asia. Earlier reports indicated that Sony considered scrapping the deal due to disagreements surrounding the appointment of the CEO of the merged entity. However, the terms of the deal are still being negotiated, and Zee has issued a release refuting the media’s claims.
The merger agreement between Sony and Zee was signed in 2021, and was targeted for completion by the end of September next year. The deal positions Sony as the majority stakeholder in the merged unit, which is expected to become India’s largest broadcaster upon successful closure.
While Indian regulators approved the merger in August, Sony cited delays in September and Zee requested an extension in December. Recent reports have suggested that Sony may abandon the $10 billion merger, raising questions about its closing. Zee expressed commitment to the merger and ongoing efforts towards a successful conclusion. Sony has not issued an official statement regarding media reports on the merger dispute.
Zee Entertainment is advising its CEO, Punit Goenka, to take over the leadership of the merged entity. However, Sony is said to be opposing this choice due to Goenka’s misappropriation of company funds. The complaint is currently under investigation by the Securities and Exchange Board of India (SEBI). Sony is hesitant to take on Goenka as CEO amid ongoing investigations.
If the merger goes ahead, the combined entity will pose a significant challenge to global streaming platforms like Netflix, Amazon Prime Video, and Disney+ Hotstar as well as local competitors like JioCinema. According to Elara Capital, the outcome of the negotiations and terms of the deal are expected to be clear in the next three weeks before January 21, 2024. The delay in the advance payment to Disney by Zee is not seen as an indication of a merger, the report added, as talks between the parties continue.
