In the Zee-Sony merger saga, it's easier to pinpoint what's going wrong than to find a glimmer of what's going right. The merger was first announced in December 2021. Two years after the grand announcement of the media giants' merger, fast-forward to the present, and the future of the potential deal appears to be a rather bleak ride.
But Guess what? For Zee, it has never been the easy road.
From legal battles to insolvency conflicts, ZEEL (Zee Entertainment Enterprises Ltd.) has arguably been the hardest hit since the announcement of the deal. However, amid the turmoil of cases and extended deadlines, Sony appears steadfastly committed to pursuing this merger.
A Cut-Short Story
Since the inception of discussions surrounding the potential deal, IndusInd Bank swiftly raised concerns, becoming the first financial institution to take legal action against the merger. The Bank filed a case in the bankruptcy court against Zee Entertainment Enterprises, seeking payment of over Rs 89 crore in defaulted amounts. However, the case was later resolved, as both parties reached a mutual settlement regarding the payment dispute.
In July 2022, the merger received approval from both the BSE and NSE stock exchanges. Not much time after, the merger received a thumbs-up from the Competition Commission of India (CCI), as well.
In that same year, IDBI Bank initiated insolvency proceedings against Zee by filing a petition with the National Company Law Tribunal (NCLT). The move aimed to recover dues totaling Rs 149.60 crore from the media firm. Axis Bank had also expressed apprehensions regarding the merger, pursuing a claim of Rs 150 crore for outstanding amounts owed by three Essel Group companies.
However, last year proved to be particularly challenging for the merger as SEBI entered the picture. On August 14, SEBI amended its directive, prohibiting Subhash Chandra and Punit Goenka from assuming directorial or key managerial roles in the newly formed company. Goenka contested the ruling in SAT. Concurrently, IDBI and Axis contested NCLT's decision in NCLAT.
Two significant outcomes emerged- SAT nullified SEBI's order restricting Goenka from holding a C-suite position, while NCLAT refused to impede the significant merger, facilitating the creation of a media giant.
Meeting the Deadlines
Last month, Zee announced a deadline extension for its 2021 merger deal with Sony Pictures Networks India. The initial two-year timeline, set to conclude by December 21, 2023, includes regulatory approvals, with an additional one-month grace period. As of January 21, the extended negotiation window comes to a close.
The merger snag centers on leadership control, initially designated for Goenka as per the agreed terms.
As the fate of the $10 billion mega deal continues to teeter, uncertainties loom over the final outcome, casting a shadow on the anticipated consolidation in the media industry.
