Culver Max Entertainment Private Limited (CME), formerly known as Sony Pictures Networks India Private Limited, officially terminated the proposed merger with Zee Entertainment on January 22. This brings to an end a two-year effort to create the largest media and entertainment company in India through the union of Sony and Zee.
In a statement issued by Sony Pictures Entertainment, CME notified Zee Entertainment Enterprises Ltd. (ZEEL) about the termination of the agreement dated December 22, 2021, for the merger of ZEEL and CME.
The termination comes after unsuccessful attempts to extend the end date under the merger cooperation agreement by the January 21 deadline. The notice expressed disappointment that the closing conditions of the merger were not satisfied after more than two years of negotiations. Despite the setback, Sony remains committed to expanding its presence in the vibrant and fast-growing Indian market, continuing to deliver world-class entertainment to Indian audiences.
Initiated in 2021, the $10 billion merger discussions were scheduled for completion by December 21, 2023. Delays, including regulatory obstacles and legal actions by creditors against the company, hindered the deal’s progress.
The primary factor contributing to the merger’s demise appears to be the Securities and Exchange Board of India (SEBI)’s investigation into an alleged money laundering case involving Zee Entertainment’s promoters, including Punit Goenka. The termination stems from concerns about Goenka’s continued role as MD & CEO in the merged entity.
Had the merger proceeded, the combined entity would have controlled over 70 TV channels, two video streaming services (ZEE5 and Sony LIV), and two film studios (Zee Studios and Sony Pictures Films India), establishing itself as the largest entertainment network in India.
The termination sets the stage for intense competition in the Indian media and entertainment sector, especially with reports indicating that Reliance is moving forward with plans to merge its media and entertainment business with Disney, creating a formidable presence in this rapidly expanding industry in India.
Zee Entertainment, however, refuted Sony’s claims, stating that it has not breached the terms of the merger agreement. The company is actively evaluating options to address the situation, including the ongoing issue regarding Punit Goenka’s position.
On this point, Zee stated, ‘Punit Goenka, MD & CEO of ZEEL, was agreeable to step down in the interest of the merger. These discussions did not result in any proposal from Sony, but they rather have chosen to terminate.’
Looking beyond the fallen deal, R. Gopalan, Chairman of ZEE Entertainment Enterprises, said, ‘The company will continue to evaluate organic and inorganic opportunities for growth, leveraging the intrinsic value of its assets.’
