Sony canceled the merger between its Indian unit and Zee Entertainment on Monday, ending two years of takeover deliberations that would have created a $10 billion media powerhouse in the South Asian market.
Sony said in a statement that it had sent a termination letter to Zee after the Indian company failed to meet the conditions, despite a 30-day extension. Sony said it was “deeply disappointed” by the Indian company’s failure to do its part in the deal. The prospect of completing the deal has seen Zee shares rise by 60% in the second half of 2023. The Indian stock market is closed today due to a public holiday in the state of Maharashtra.
Sony Pictures Networks India, the Japanese conglomerate’s wholly-owned Indian arm, has been pushing to remove Zee CEO Puneet Goenka from staying with the combined entity and leading it after the deal, according to people familiar with the matter. Goenka has resisted for months, and local media reported last week that he might agree to step down.
Sony has also looked to Zee to improve its finances, something that has worsened in recent quarters. The two companies announced their intention to merge the entities in September 2021. The deal would have created a $10 billion media powerhouse in India, where billionaire Mukesh Ambani is increasingly flexing his wealth and reach in the media space.
Ambani’s Reliance is in advanced stages of talks to acquire a 51% stake in Disney’s India business, which includes streaming service Hotstar.
“I am determined to move forward positively and work to strengthen Bharat’s leading M&E company, for all its stakeholders,” Goenka said in a tweet on Monday, calling the news a “sign from God.”
The merger between Zee and Sony in India was seen as key for both companies regarding their future prospects in the country. “The Disney+Reliance merger will create a strong market leader with over 40% TV viewership share and a dominant streaming presence (Disney+ Hotstar and JioCinema are the top two OTT platforms in India in terms of MAU share). Zee and Sony hold viewership shares They are c16% and c8-10%, respectively, and in our view, the combined Zee+Sony entity, which has a viewership share of 25%-30%, will be in a much better position to compete with Reliance+, UBS analysts said earlier this month. : “The Disney entity has merged.”
Zee and Sony have been important pillars of the Indian television industry over the past 25 years. Sony launched Sony Entertainment Television in India in 1995 and aired some of its most memorable shows including “Indian Idol” and “Kaun Banega Crorepati”, an official Hindi adaptation of “Who Wants to be a Millionaire?”
The companies also operate on-demand streaming services such as Zee5 and SonyLiv that compete with dozens of other players including Netflix, Amazon Prime Video, Disney’s Hotstar and Ambani’s JioCinema.