A spectacular takeover tale in one of the world’s fastest-growing media businesses is coming to a brutal climax.
Sony Group (SONY) has called off the merger of its India subsidiary with Mumbai-based Zee Entertainment, the Japanese firm said on Monday.
According to experts, the merger, announced two years ago, would have established a $10 billion media behemoth in India, with a war chest to compete with both domestic rivals and global streaming giants such as Netflix (NFLX) and Amazon (AMZN).
Sony’s decision to halt negotiations comes as Disney (DIS) and Mukesh Ambani’s Reliance Industries are considering integrating their Indian media operations.
According to the company’s announcement, “the closing conditions to the merger were not satisfied,” and it went on to say that it “does not anticipate any material impact on its consolidated financial results as a result of the termination of the definitive agreements for the merger.”
It did not identify the unfulfilled requirements, but media sources indicate that disputes existed between the two corporations about who would run the united organization.
Zee had recommended Punit Goenka, its CEO, as the merged company’s boss, but Sony had objected since he was under investigation by India’s market regulator, Reuters said. Zee stated in its statement that it has received the termination letter and “is evaluating all available options.” Sony also stated that it is seeking a termination fee of $90 million “on account of alleged breaches” by Zee of the merger conditions. Zee “categorically denies all the assertions, including their claims for the termination fee,” according to the statement.
The split occurs as rivalry in India’s entertainment sector heats up.
With its relatively open economy and large English-speaking population, the world’s most populous country is an appealing site for worldwide entertainment firms.
Prime Minister Narendra Modi’s administration wants India to soon become the world’s third-largest media and entertainment market, up from fifth place now. If the Disney-Reliance transaction is approved, it will not only strengthen the American company’s position in India but will also establish a gigantic entity with over 100 TV channels and two streaming platforms.
(CNN, REUTERS, 2024)