Sony tells Zee its terminating the $10 billion India merger, For both companies, the combination of Zee and Sony’s Indian operations was crucial to their prospects going forward.
On Monday, Sony announced the cancellation of its proposed merger with Zee Entertainment, bringing an end to a two-year acquisition process that was expected to result in the creation of a $10 billion media giant in the South Asian market.
In a statement, Sony stated that Zee received a notice of termination from the company after the Indian company did not fulfill the terms, even after a 30-day grace period. Sony expressed its “great disappointment” at the Indian company’s failure to fulfill its end of the bargain. Zee’s stock rose 60% in the second half of 2023 on hopes that the deal would close. Because today is a public holiday in the state of Maharashtra, the Indian stock market is closed.
According to persons acquainted with the case, Sony Pictures Networks India, the Japanese conglomerate’s wholly-owned Indian affiliate, was lobbying for Punit Goenka, the chief executive of Zee, to be removed from his position running the merged business after the deal. Goenka retaliated for months, and last week there were rumors in the local press that he could accept to step aside.
Related: Preorders for Apple Vision Pro go live in the US ahead of February 2 launch
Sony also asked Zee to help with its finances, which have been worse over the past few quarters. In September 2021, the two companies declared their desire to combine their corporations. The agreement would have established a $10 billion media behemoth in India, a country where multibillionaire Mukesh Ambani is showing off his resources and connections in the industry.
The negotiations to buy a 51 percent share in Disney’s Indian company, which includes the streaming service Hotstar, are progressing at Ambani’s Reliance.
“I resolve to move ahead positively and work towards strengthening Bharat’s pioneering M&E Company, for all its stakeholders,” Goenka said in a tweet Monday, calling the news a “sign from the lord.”
For both companies, the combination of Zee and Sony’s Indian operations was crucial to their prospects going forward. The combination of Disney and Reliance would provide a powerful market leader with a 40% TV viewership share and a commanding streaming presence (the two biggest OTT platforms in India by MAU share are Disney+Hotstar and JioCinema). A combined Zee+Sony business, with a c25–30% viewership share, would be in a much stronger position to compete with the Reliance + Disney merged firm, according to UBS analysts earlier this month. Zee and Sony have viewership shares of c16% and c8–10%, respectively.
For the past 25 years, Zee and Sony have been significant players in the Indian TV market. When Sony Entertainment Television was first introduced in India in 1995, it showed some of the most iconic programs, such as “Indian Idol” and “Kaun Banega Crorepati,” which was the official Hindi version of “Who Wants to be a Millionaire?”
Along with Netflix, Amazon Prime Video, Disney’s Hotstar, Ambani’s JioCinema, and dozens of other competitors, the companies also run on-demand streaming services like Zee5 and SonyLiv.
