Sony-Zee Merger in Turmoil over Leadership Dispute, Claims Report
Both Sony and Zee have found themselves at odds over the issue of leadership in the merged media company, putting the entire merger in jeopardy. NP Singh, the Managing Director and CEO of Sony India, and Punit Goenka, the Managing Director and CEO of ZEEL, are both vying for the top position in the new entity. This conflict has led to a standstill in the development process, with the looming December 21 deadline adding further pressure.
According to reports, Sony is reluctant to accept Zee’s position and has raised concerns over the overturned ban on Punit Goenka by the Securities and Exchange Board of India (SEBI). Goenka and Subhash Chandra, the Chairman of Essel Group, were banned by SEBI due to an ongoing investigation into allegations of fund diversion by Goenka.
While Sony has yet to respond to the issue, ZEE has chosen not to comment either. However, it is expected that Sony will clarify its position in a letter to be released next week.
As per the initial arrangement made two years ago, Goenka was designated to lead the merged entity, with Sony holding a 50.86 percent stake. The Goenka family was set to hold a 3.99 percent stake, with the remaining 45.15 percent owned by public shareholders.
However, given the circumstances surrounding Goenka, Sony now appears hesitant to proceed with Zee’s stance. The merger, if it proceeds as planned, would result in ZEEL being delisted from stock exchanges, becoming Sony-Zee. Under the merger scheme, shareholders of Zee would receive 85 shares of the merged entity for every 100 shares of Zee that they own.
Despite the uncertainties, ZEEL has reiterated its commitment to the merger and emphasized its efforts to ensure a successful completion. ZEEL’s recent annual report disclosed significant expenditure related to merger costs.
The merger between ZEEL and Culver Max Entertainment, formerly known as Sony India, was sanctioned by the National Company Law Tribunal (NCLT) in August. However, no specific timeline was provided for the completion of the merger. It has been nearly two years since the merger was first announced.
Once the merger is finalized, the combined entity will boast an extensive portfolio of over 70 TV channels, including ownership of the popular video streaming services ZEE5 and Sony LIV. Additionally, the merged company will have control over two film studios: Zee Studios and Sony Pictures Films India. This merger would position the conglomerate as the largest entertainment network in India.
While the proposed merger has received approval from ZEEL’s shareholders and various regulatory bodies, the leadership dispute threatens to hinder its progress. As the deadline approaches, the future of the Sony-Zee merger remains uncertain.
