Sony 'terminates' Indian merger with Zee

Agencies | Tokyo, Japan                                                   

The Daily Tribune – www.newsofbahrain.com

Sony "terminated" yesterday the $10-billion merger of its Indian operations with local rival Zee Entertainment that would have created a new streaming giant in the world's most populous nation.

The joint entity with mooted annual revenue of $2 billion would have helped both firms better compete with Disney, Amazon and Netflix in the entertainment market of 1.4 billion people.

But with reports that Sony was unhappy with Zee's performance since the merger was agreed in late 2021, the Japanese giant said Monday that conditions to close the deal "were not satisfied".

Another stumbling block was reportedly Zee's insistence that its chief executive Punit Goenka, son of founder Subhash Chandra, run the combined entity.

Both men are being probed by India's financial markets regulator over alleged fraud. They deny any wrongdoing.

Zee said Monday that Goenka "was agreeable to step down in the interest of the merger" and that it proposed an extension of up to six months to close the deal.

It added in a statement that Sony was also seeking a "termination fee" of $90 million for alleged breaches by Zee, a claim that the Indian company said it "categorically refutes".

Goenka said on X, formerly Twitter, that “the deal that I have spent two years envisioning and working towards had fallen through, despite my best and most honest efforts”.

“I believe this to be a sign from the Lord,” he added, posting a selfie from a ceremony opening a grand new Hindu temple in the Indian city of Ayodhya. Before the Sony deal was agreed, Goenka had also been under pressure to quit from Zee’s largest shareholder Invesco.

Sony was to have owned 50.86 percent of the new entity with Goenka’s family controlling 3.99%.

The announcement came after the Tokyo market closed, with Sony up 1.89% at 14,800 yen.