On Monday, Sony announced the termination of the planned merger between its India unit and Zee Entertainment, ending the two-year acquisition process. The merger would have created a $10 billion media powerhouse in the South Asian market.
In a statement, Sony expressed extreme disappointment at Zee’s failure to meet the merger conditions, despite a 30-day extension. The news led to a 60% increase in Zee’s shares in the latter half of 2023. The Indian stock market is closed today due to a public holiday in the state of Maharashtra.
Sony Pictures Networks India, a wholly-owned Indian arm of the Japanese conglomerate, had advocated for the removal of Zee’s chief executive, Punit Goenka, from the merged entity following the deal. However, Zee strongly denied Sony’s assertions and stated that it is evaluating all its options, including legal action against Sony’s India arm.
Prior to the termination, Sony had also urged Zee to improve its financial situation, which has deteriorated in recent months. The merger was initially announced in September 2021, with the intention of creating a $10 billion media powerhouse in India, where billionaire Mukesh Ambani is expanding his influence in the media industry.
Ambani’s Reliance is in advanced discussions to acquire a 51% stake in Disney’s India business, including the streaming service Hotstar.
Reacting to the news, Goenka tweeted, “I resolve to move ahead positively and work towards strengthening Bharat’s pioneering M&E Company, for all its stakeholders,” calling the termination a “sign from the Lord.”
The union of Zee and Sony’s India business was considered crucial for both companies’ future prospects in the country. Analysts at UBS had highlighted the significance, stating that a merged Zee+Sony entity would be better equipped to compete with the Reliance + Disney merged entity, potentially possessing a 25-30% viewership share in the Indian market.
Both Zee and Sony have been prominent players in the Indian TV industry for the past 25 years. Sony introduced Sony Entertainment Television in India in 1995 and has aired popular shows such as “Indian Idol” and “Kaun Banega Crorepati,” the official Hindi adaptation of “Who Wants to be a Millionaire?”
Additionally, the companies run on-demand streaming services like Zee5 and SonyLiv, competing against numerous other platforms including Netflix, Amazon Prime Video, Disney’s Hotstar, and Ambani’s JioCinema.
