Zee- Sony Merger: ZEE Again Reaching Out To Sony Despite $10 Bn Fallout?

Zee Entertainment Enterprises Ltd (ZEEL) is making a last-ditch attempt to revive its terminated $10 billion merger with Sony Group. After Sony pulled the plug on the deal in January, ZEEL has reached out to Sony once again, urging the Japanese multinational to reconsider its decision. According to industry sources, ZEEL has extended an offer for talks in December, and Sony is now evaluating the proposal.

Legal Battles After Merger Collapse
Initially announced in December 2021, the merger collapsed earlier this year after Sony accused ZEEL of failing to meet closing conditions. Despite a one-month extension granted to ZEEL, Sony ended the deal in January 2024, citing unresolved issues. In response, ZEEL filed a petition with the National Company Law Tribunal (NCLT) seeking to enforce the merger, while Sony initiated arbitration proceedings before the Singapore International Arbitration Centre (SIAC), claiming a termination fee of $90 million (approximately Rs 748.5 crore).

Sources close to ZEEL mentioned that the Indian company never stopped working toward reconciliation and had even proposed an additional six-month extension to complete the deal. Despite the tensions, ZEEL remains hopeful, with one source stating that "the ball is in Sony's court" for the deal to be revived.

Financial Impact of the Terminated Merger
The termination of the merger has had significant financial implications. ZEEL disclosed that it spent approximately Rs 427 crore on the merger process, with Rs 250.73 crore spent during the first nine months of FY24 alone. The company had previously allocated Rs 176.20 crore in FY23 for the deal. The collapse of the merger has left ZEEL refocusing its efforts on internal growth strategies, including a focus on content quality, optimization, and frugality.

Sony's Future Strategy in India
Sony's leadership has indicated a strategic pivot following the deal's termination. Hiroki Totoki, Sony’s President, COO, and CFO, stated that while the company sees India as a market with long-term growth potential, it will now explore other organic opportunities and alternative mergers or acquisitions opportunities to replace the previous deal. For ZEEL, the merger with Sony, if completed, would have resulted in a powerhouse media company controlling over 70 TV channels, two major video streaming services—ZEE5 and Sony LIV—and two film studios, Zee Studios and Sony Pictures Films India. This would have made it the largest entertainment network in India. However, the stalled merger leaves ZEEL navigating a challenging path forward.