Sony Group Corp has convened a board meeting scheduled for Friday to make a crucial decision regarding its $10-billion merger with Zee Entertainment Enterprises in India, 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 broadcast company, is under scrutiny due to strained negotiations and unresolved issues.
Sony and Zee have faced disagreements regarding Zee's Managing Director and Chief Executive Officer, Punit Goenka, leading the merged entities. Sony has been advocating for NP Singh, its India MD and CEO, to serve as the chief executive of the new entity in the interim unless Goenka is exonerated in all pending cases.
On Thursday, Goenka offered to step down from his role as CEO post-merger. Following this news, Zee Entertainment shares rallied over seven per cent yesterday. However, Zee has not yet agreed to N P Singh's appointment as head of the merged corporation.
The merger deal was expected to be completed by December 20, 2023. However, a one-month grace period was added to resolve ongoing issues, which expire on Saturday, January 20.
Earlier this month, reports of the merger falling through had also emerged, which Zee vehemently denied.
An official statement from Zee read, "We wish to reiterate that the company is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger." Sony did not make any official statement to the exchanges.
If the deal goes through, the merged entity will become India's fourth-largest media company. The top three positions are held by Google, Meta and Disney-Star, respectively. Currently, Zee has a market share of 18 per cent in the Indian entertainment and broadcasting business, compared to Sony's six per cent.
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The proposed merger aims to create a 74-channel powerhouse, providing the Japanese group with a sizable market share at a time when consolidation is reshaping the media landscape in India. Sony's holding in the combined entity is expected to be 53 per cent, and the company has committed to investing $1.6 billion to expand its footprint.
Since the merger announcement, Zee's net profit has seen a substantial decline, dropping to Rs 48 crore in financial year 2022-23 (FY23) from Rs 956 crore in FY22 and Rs 793 crore in FY21.
