The high-stakes merger saga between Sony Group and Mumbai-based Zee Entertainment, set to create a $10 billion media giant in India, has taken a bitter turn with Sony officially calling off the deal on Monday.
Originally announced two years ago, the proposed merger aimed to establish a formidable entity in India’s rapidly growing media industry, equipped to compete with local rivals and global streaming giants like Netflix and Amazon, as noted by analysts.
Sony’s decision to terminate talks comes amid discussions between Disney and Mukesh Ambani’s Reliance Industries about potentially combining their Indian media businesses.
In a statement, Sony cited that “the closing conditions to the merger were not satisfied,” without specifying the unmet conditions. Media reports suggest tensions arose between the companies regarding the leadership of the merged entity.
Zee had nominated its CEO, Punit Goenka, to lead the combined company, but Sony disagreed, pointing to an ongoing investigation by India’s market regulator. Sony, in its statement, mentioned that it does not anticipate a material impact on its financial results due to the termination.
Zee, in response, acknowledged receiving the termination letter and stated it is evaluating available options. The company revealed that Sony is seeking a termination fee of $90 million, alleging breaches by Zee of the merger terms. Zee vehemently denies the claims, including the request for a termination fee.
The breakup unfolds against the backdrop of intensifying competition in India’s entertainment industry. With its vast English-speaking population and a relatively free market, India is a highly sought-after destination for global entertainment companies. The Modi government envisions India rising to become the world’s third-largest media and entertainment market, up from its current fifth position.
The potential Disney-Reliance deal, if finalized, would not only strengthen Disney’s presence in India but also create a colossal entity with over 100 TV channels and two streaming platforms. The termination of the Sony-Zee merger adds another layer of complexity to the evolving landscape of India’s media and entertainment sector.
