Working Towards Successful Closure of Merger with Sony : Zee Entertainment

Zee Entertainment Enterprises Ltd on Wednesday said it is working towards the successful closure of the proposed merger with Culver Max Entertainment (earlier known as Sony Pictures Networks India). The company also refuted a media report that the USD 10 billion merger, which would create the largest entertainment network in India, risks collapse over who would become CEO of the merged entity as "factually incorrect".

"We wish to reiterate that the company is continuing to work towards a successful closure of the proposed merger as per the composite scheme of arrangement approved by the NCLT, Mumbai Bench," Zee Entertainment Enterprises Ltd (ZEEL) said in a regulatory filing.

In August this year, the National Company Law Tribunal (NCLT) allowed the merger of ZEEL and Culver Max Entertainment.

ZEEL was responding to clarification sought by BSE over the media report which stated that the proposed merger risks a collapse unless the two sides can agree on who'll lead the merged entity and give the final touches to the deal.

The company, however, did not specify any timelines. It has been almost two years since the merger deal was announced. E-mails sent to Sony seeking comments on the future of the proposed merger remained unanswered.

However, in June this year, Sony Pictures Entertainment (SPE) had stated that it would continue to monitor developments that may affect the merger deal between its Indian arm and ZEEL.

This followed an interim order by Sebi barring Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka from holding the position of a director or key managerial personnel in any listed company. The market regulator took action after they were found diverting funds from the company.

Chandra and Goenka moved the Securities Appellate Tribunal (SAT) challenging the Sebi interim order. In October, SAT quashed the Sebi interim order.

In September 2021, then Sony Pictures Networks India (SPNI) and ZEEL had entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and programme libraries. The combined entity will own over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.

Subsequently, the two parties signed a definitive agreement for their merger in December 2022. As per the agreement, ZEEL's chief executive Punit Goenka was to lead the combined company as its Managing Director & CEO. The majority of the board of directors of the combined entity would be nominated by the Sony Group and include the current SPNI Managing Director and CEO, NP Singh.

However, questions over the future of the merger arose after Sebi's actions against Chandra and Goenka for siphoning off funds of ZEEL.

The proposed merger has already been approved by the shareholders of ZEEL and sectoral regulators, including the Competition Commission of India.