In Ayodhya, Zee boss Punit Goenka dubs Sony deal termination as 'a sign from the Lord'

MD & CEO, Zee Entertainment Enterprises Ltd (ZEEL) Punit Goenka today dubbed the breakdown of Sony-Zee deal as a sign from Lord Ram.

Goenka, who was in the Ayodhya for the Ram temple inauguration, tweeted, "As I arrived at Ayodhya early this morning for the auspicious occasion of Pran Pratishtha, I received a message that the deal that I have spent 2 years envisioning and working towards had fallen through, despite my best and most honest efforts. I believe this to be a sign from the Lord. I resolve to move ahead positively and work towards strengthening Bharat’s pioneering M&E Company, for all its stakeholders. Jai Shri Ram."

Sony Group Corp announced on Monday the termination of its $10 billion merger with Zee Entertainment, initiated over two years ago, citing a deadlock over leadership of the combined entity. The entertainment giant issued a termination notice to Zee, seeking $90 million as break-up fees for alleged violations of the merger pact terms and is now considering arbitration.


In response, Zee denied all claims made by Sony in a stock exchange filing and asserted its commitment to the merger through irreversible steps incurring significant costs. The dispute over leadership appears to be a key factor in the deal's breakdown, with Sony resisting Zee CEO Punit Goenka's demand to stay on post-merger, particularly after Goenka faced an investigation by market regulator SEBI over fraud allegations.

The deal was seen as crucial for both companies to navigate the challenges in the rapidly growing Indian economy. Its failure jeopardizes Zee's financial outlook, impacting agreements such as its four-year deal with Disney's Star for TV broadcasting rights for cricket events. Sony and Zee were aiming to create an entertainment powerhouse with over 70 Indian TV channels, Bollywood studios, and an extensive film library to compete with global streaming giants like Netflix and Amazon.

Though the Sebi order was stayed by the Securities Appellate Tribunal, Sony is not comfortable with Goenka leading the merged entity during the probe due to the stringent corporate governance policy in Japan.

The combined entity would have owned over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.

Sony had plans to invest USD 1.575 billion in the merged entity and have majority stake. Chandra family was also free to increase its shareholding from the current about 4 per cent to up to 20 per cent.