Sony Pictures Delays Zee Merger, Demands Closure Conditions

New Delhi, Dec 19 (PTI) Sony Pictures Networks India on Tuesday said it has not yet agreed to a deadline extension requested by Zee Entertainment Enterprises Ltd (ZEEL) for their merger, and is looking forward to know how the latter planned to complete the remaining critical closing conditions.

In a statement, Sony Pictures Networks India (SPNI) said ZEE's notice to the Bombay Stock Exchange and the National Stock Exchange of India dated December 17, seeking an extension of the merger deadline is "an acknowledgement that they will not be able to meet the December 21, 2023 deadline to close the SPNI/ZEE merger".

The notice triggers an existing contractual provision in the deal that allows for both parties to discuss the possibility of extending the deadline, it added.

"SPNI is required to start those conversations but has not yet agreed to a deadline extension," the company said.

It further said, "We look forward to hearing ZEE's proposals and how they plan to complete the remaining critical closing conditions."

Comments from ZEEL could not be immediately obtained.

Earlier on December 17, ZEEL in a regulatory update said it has sought an extension in the December 21, 2023 deadline of its proposed merger with Culver Max Entertainment (CMEPL), formerly known as Sony Pictures Networks India.

ZEEL had approached Culver Max and Bangla Entertainment Pvt Ltd (BEPL) for an extension in the deadline to complete the proposed merger, which will create India's biggest media conglomerate, said regulatory updates.

CMEPL is an indirect wholly-owned subsidiary of Sony Group Corporation (SGC). BEPL is also an indirect wholly-owned subsidiary of SGC and a part of the SGC Group.

The proposed USD 10-billion merger of ZEEL, BEPL and CMEPL has received regulatory approvals from fair trade regulator CCI, bourses NSE and BSE, shareholders and creditors of the company.

In August this year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger of ZEEL and Culver Max Entertainment. As per the agreements, ZEEL MD & CEO Punit Goenka has to lead the merger entity. However, according to some reports, now CMEPL is insisting on making way for its Sony Pictures Network head N P Singh.

This followed an interim order by Sebi barring Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka from holding the position of a director or key managerial personnel in any listed company. The market regulator took the action after they were found diverting funds from the company.

Chandra and Goenka moved the Securities Appellate Tribunal (SAT) challenging the Sebi interim order. In October, SAT quashed the Sebi interim order.

Earlier in September 2021, then Sony Pictures Networks India and ZEEL had entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and programme libraries.

The combined entity will own 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.

Subsequently, the two parties signed a definitive agreement for their merger in December 2022.

As per the agreement, ZEEL's chief executive Punit Goenka was to lead the combined company as its Managing Director & CEO.

The majority of the board of directors of the combined entity would be nominated by the Sony Group and include the current SPNI Managing Director and CEO N P Singh.

However, questions over the future of the merger arose after Sebi's actions against Chandra and Goenka for siphoning off funds of ZEEL.

The proposed merger has already been approved by the shareholders of ZEEL and sectoral regulators including the Competition Commission of India.