Zee Entertainment reportedly incurred merger-related expenses totaling Rs 432 crore in the fiscal years 2022-23 and 2023-24 due to its failed merger attempt with Culver Max Entertainment, the Indian media unit of Sony Group Corporation.
As per a report by the Economic Times, the company's merger-related expenses amounted to Rs 256 crore in 2023-24 and Rs 176 crore in the previous year. Culver Max Entertainment ended its merger agreement with Zee Entertainment on January 22 owing to disagreements over the leadership structure of the merged firm and unfulfilled closing conditions.
The merger agreement was initially finalized in December 2021. It had obtained all necessary approvals from the bourses, the Competition Commission of India (CCI), and the National Company Law Tribunal (NCLT).
To comply with merger requirements and streamline its portfolio, Zee Entertainment incurred impairment charges totaling Rs 331 crore in 2022-23 due to the shutdown of certain operations, such as Margo Networks.
The company had also stated that the impact on its consolidated results for 2022-23 was Rs 98 crore, as the losses from these entities had already been accounted for in previous financial results.
The firm had projected a liability of Rs 32 crore for covering closure expenses in 2023-24.
Layoffs in trail
As part of its aggressive cost-cutting strategy, Zee Entertainment reduced its workforce by 15 per cent, resulting in an employee termination cost of Rs 22 crore recorded during a recent restructuring.
Zee Entertainment stated that the company is not expecting any adverse effects from the arbitration cases filed by Culver Max Entertainment and Star India, as both cases were "untenable."
Culver Max Entertainment initiated proceedings at the Singapore International Arbitration Centre, seeking $90 million in termination fees from Zee Entertainment, alleging breaches of the merger agreement.
