Sony Board today approves $10 billion merger with Zee Entertainment

Sony Group Corp on Friday convened a board meeting to make a crucial decision on its $10 billion merger with India’s Zee Entertainment Enterprises, according to a report by The Economic Times (ET). The merger, initially announced two years ago with the aim of creating the country’s largest broadcaster, has come under scrutiny due to tense negotiations and unresolved issues.

Sony and Zee have faced disagreements over Zee’s Managing Director and Chief Executive Officer, Punit Goenka, heading the merged entities. Sony is advocating that NP Singh, its India MD and CEO, will serve as CEO of the new entity in the meantime unless Goenka is acquitted in all the pending cases.

On Thursday, Goenka offered to step down from his role as CEO after the merger. Following this news, shares of Zee Entertainment rose over seven percent yesterday. However, Zee has not yet agreed to the appointment of NP Singh as head of the merged company.

The merger agreement is expected to close on December 20, 2023. However, a one-month grace period was added to resolve ongoing issues, expiring on Saturday, January 20.

Earlier this month, reports had also emerged about the failure of the merger, which Zee vehemently denied.

An official statement from Zee said: “We would like to reiterate that the company is committed to the merger with Sony and continues to work towards a successful completion of the proposed merger.” Sony has not made an official statement to the stock exchanges.

If the deal goes through, the merged entity will become India’s fourth largest media company. The top three positions are occupied by Google, Meta and Disney-Star respectively. Currently, Zee has an 18 percent market share in the Indian entertainment and broadcasting sector, compared to Sony’s six percent.

The proposed merger aims to create a 74-channel powerhouse, giving the Japanese group significant market share at a time when consolidation is reshaping the media landscape in India. Sony’s stake in the combined entity is expected to be 53 percent, and the company has committed to investing $1.6 billion to expand its footprint.

Since the merger announcement, Zee’s net profit has fallen significantly, to Rs 48 crore in the financial year 2022-2023 (FY23), from Rs 956 crore in FY22 and Rs 793 crore in FY21.

First print: January 19, 2024 | 10:02 am IST