Sony called off the merger between its India unit and Zee Entertainment on Monday. The deal, which had been discussed for two years, would have made the combined company a $10 billion media giant in South Asia.
Sony said in a statement that it had sent Zee a letter of termination because the Indian company had not met the terms, even after being given an extra 30 days. Sony said it was “extremely disappointed” that the Indian company didn’t do what it was supposed to do to make the deal work. In the second half of 2023, Zee’s shares went up 60% because people thought the deal would go through. Today is a holiday in the state of Maharashtra, so the Indian stock market is closed.
People who know about the situation say that Sony Pictures Networks India, the Indian part of the Japanese conglomerate, wanted Zee’s CEO Punit Goenka to be fired because he planned to stay on with the merged company and lead it after the deal. Goenka fought back for months, and last week, news outlets in his home country said that he might agree to step down.
Sony also wanted Zee to fix its money problems, which have gotten worse over the last few quarters. They said they were going to merge their businesses in September 2021. The deal would have made India’s media industry worth $10 billion. Billionaire Mukesh Ambani is showing off his money and power in the media business more and more.
Reliance, owned by Ambani, is in advanced stages of talks to buy a 51% share in Disney’s India business. This includes the streaming service Hotstar.
Goenka said in a tweet Monday, “I make up my mind to move forward positively and work towards strengthening Bharat’s pioneering M&E Company for all its stakeholders.” He called the news a “sign from the lord.”
The deal for Zee and Sony’s India business to join was seen as important for both companies’ futures in the country. “When Disney and Reliance merge, they will form a strong market leader with over 40% of the TV viewership share and a strong streaming presence (Disney+Hotstar and JioCinema are India’s two biggest OTT platforms by MAU share).” “Zee and Sony have viewership shares of about 16% and 8–10%, respectively. We think that a merged Zee+Sony entity, with a viewership share of about 25–30%, would be in a much better position to compete with the merged Reliance+Disney entity,” UBS analysts said earlier this month.
In India, Zee and Sony have been big names in the TV business for two decades. Sony started Sony Entertainment Television in India in 1995. It has shown some of the most famous shows, such as “Indian Idol” and “Kaun Banega Crorepati,” which is the official Hindi version of “Who Wants to Be a Millionaire?”
They also run on-demand streaming services like Zee5 and SonyLiv that compete with a lot of other services, like Netflix, Amazon Prime Video, Disney’s Hotstar, and Ambani’s JioCinema.
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