Zee Entertainment mulls filing counterclaims against Sony India in SIAC

Legal experts say Zee took several steps to merge the companies which resulted in litigation costs

Sony, Zee, Sony-Zee merger
Zee said it spent Rs 366.59 crore on compliance until September 2023 on the merger
Dev Chatterjee Mumbai
2 min read Last Updated : Jan 26 2024 | 10:38 PM IST
Zee Entertainment Enterprises (ZEEL) is planning to make counterclaims against Sony Pictures Networks India in an arbitration court in Singapore after the Japanese firm terminated the merger agreement with Zee and sought $90 million as termination fees from the Indian media conglomerate.

Legal experts said Zee had taken several steps to merge the companies which resulted in litigation costs in the last two years. “In its appeal at the SAIC, Zee would be asking Sony Pictures Networks India to pay these legal costs,” said a lawyer privy to the development. In its statement to the stock exchanges, Zee said it undertook several permanent and irreversible steps, resulting in one-time and recurring costs for the company.

An email sent to Zee on Thursday did not elicit any response.

In its annual report for the financial year 2023, Zee reported exceptional expenses during the year which primarily included Rs 176.2 crore for the proposed merger. Besides, in order to expedite the merger process, Zee had settled certain insolvency proceedings filed by operational creditors and bankers for Rs 223 crore. Accordingly, an additional charge of Rs 27 crore was recorded as an exceptional item.

Zee said it spent Rs 366.59 crore on compliance until September 2023 on the merger. Apart from spending Rs 176.20 crore in the financial year 2023, it spent Rs 190.39 crore in the first six months of FY24, according to a PTI report.

Apart from legal action at the Singapore International Arbitration Centre, Zee has also moved the National Company Law Tribunal (NCLT), appealing to the court to direct Sony India units to implement the scheme as per NCLT’s last year order issued on August 10, 11.

The Zee-Sony merger collapse has also led to uncertainty over Disney India’s sale of cricket TV rights to Zee Entertainment Enterprises, which may not be able to pay up. Both Zee and Disney India have not commented on the issue. Sony sent a termination notice to Zee on January 22, saying several conditions of the merger were not met. Zee, on the other hand, has said it had taken several steps to implement the merger including getting the NCLT approval in August last year.

Investment banking sources and lawyers said with the promoters’ stake at 4 per cent, the former promoters may look at inducting a strategic partner.

Topics :SonyZee EntertainmentEssel Group Zee EntertainmentzeeSony Pictures Networks

Next Story