Sony issued a termination letter over the weekend after both parties failed to reach a consensus during the 30-day grace period, which ended January 20, 2024.
Sony Group has issued a letter to Zee Entertainment, India, terminating a potential $10bn merger deal, citing an impasse over leadership roles within the combined entity. According to a Reuters News report, the letter was sent by Sony to Zee following a failure to meet the conditions of the merger.
The merger, initially announced more than two years ago, was considered crucial for the survival of both companies in the highly competitive Indian market. The decision comes amidst the looming merger between Disney’s Indian businesses and the media assets of billionaire Mukesh Ambani’s Reliance Industries.
Sony issued the termination notice over the weekend, marking the expiration of a 30-day grace period that ended January 20.
Sony, in its letter to Zee on January 22, highlighted unmet conditions as the primary reason for the termination, as reported earlier by Bloomberg News. The company is expected to disclose the termination letter to the exchange in the coming days.
The deadlock in the merger negotiations revolved around the leadership of the combined company. Zee proposed CEO Punit Goenka, but Sony disagreed due to an ongoing market regulator probe into Goenka.
Analysts warn that the collapse of the deal could have a negative impact on both parties, particularly in the face of the ongoing digital disruption in India.
Zee Entertainment is grappling with declining profits, advertising revenue, and cash reserves in a market where Netflix and Amazon.com are vying for market share. Additionally, Zee’s four-year pact with Disney’s Star for TV broadcasting rights of certain cricket events is at risk, potentially costing the company $1.32bn to $1.44bn over the agreement’s tenure.
