ZEEL Addresses Sony Merger Fallout, Assures Minimal Impact

14 Feb 2024 , 12:31 PM

Zee Entertainment Enterprises Ltd (ZEEL) provided insights on the $10-billion merger with Sony Group’s Indian arm, which was terminated last month.

Sony Group Corporation (SGC) had called off the merger with ZEEL, citing non-compliance with merger conditions, and initiated arbitration proceedings seeking a termination fee of $90 million.

ZEEL informed that the Singapore Arbitration Centre denied Sony Group’s plea to restrain ZEEL from moving to the NCLT for enforcing the merger. The Emergency Arbitrator observed a lack of jurisdiction for such an order. The matter is scheduled for an NCLT hearing on March 12, 2024.

The National Company Law Tribunal (NCLT) is a quasi-judicial entity in India, tasked with resolving matters pertaining to Indian companies. Established under the Companies Act 2013, the NCLT came into existence on June 1, 2016. The formation of the tribunal was sanctioned by the Indian government, aligning with the suggestions of the V. Balakrishna Eradi committee. Its primary focus is on addressing legal issues related to the insolvency and winding up of companies operating in India.

ZEEL, announcing its Q3 results on February 13, stated that the management believes the claims, including the termination fee, are not tenable and expects no material impact on the company.

In Q3FY24, ZEEL reported a 141% rise in consolidated net profit at ₹58.5 Crore, while revenue fell 3% to ₹2,046 Crore compared to Q3FY23’s ₹2,109 Crore.

The Mumbai bench of NCLT approved the merger scheme on August 10, 2023, which would have created a $10-billion media entity by combining ZEEL with Sony group entities Culver Max Entertainment and BEPL.

If completed, the merger would have resulted in the largest entertainment network in India, owning over 70 TV channels, ZEE5 and Sony LIV streaming services, and film studios Zee Studios and Sony Pictures Films India.

ZEEL, formerly Zee Telefilms, is an Indian media conglomerate headquartered in Mumbai. The company has diverse interests in television, print, internet, film, mobile content, and operates 45 channels globally.

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