Sony Board to Decide on $10 Billion Merger with Zee Entertainment Today

In a crucial board meeting scheduled for Friday, Sony Group Corp is all set to make a significant decision regarding its long-awaited $10-billion merger with Zee Entertainment Enterprises in India, as reported by The Economic Times (ET). This highly anticipated merger, initially announced two years ago, aimed to create the largest broadcast company in the country. However, due to strained negotiations and unresolved issues, the deal has been under scrutiny.

Disagreements Surrounding Leadership in the Merged Entity

Sony
India Today

One of the major points of contention between Sony and Zee has been the appointment of the chief executive officer for the unified company. Punit Goenka, Zee’s Managing Director and CEO, has been a subject of disagreement. Sony has been advocating for the appointment of NP Singh, their India MD and CEO, as the interim chief executive of the new entity until Goenka is exonerated from all pending cases.

Recently, Goenka offered to step down from his role as CEO post-merger, which led to a surge of over seven per cent in Zee Entertainment shares. However, Zee has not yet agreed to the appointment of NP Singh as the head of the merged corporation.

Delayed Completion and Ongoing Negotiations

The merger deal, initially expected to be completed by December 20, 2023, was hit with a roadblock. A one-month grace period was added to the timeline, extending it until Saturday, January 20, in order to address the ongoing issues and reach a resolution.

Earlier this month, there were reports alleging that the merger might fall through, a claim that Zee Entertainment vehemently denied. In an official statement, Zee expressed their commitment to the merger with Sony and reiterated their dedication to successfully concluding the proposed merger. On the other hand, Sony has not made any statements to the exchanges regarding the matter.

 

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A Potential Shift in the Indian Media Landscape

If the merger successfully materializes, the combined entity would become India’s fourth-largest media company. Currently, the top three spots are held by Google, Meta, and Disney-Star, respectively. Zee Entertainment currently holds an 18% market share in the Indian entertainment and broadcasting business, while Sony holds a six per cent share.

The aim of this proposed merger is to create a powerhouse consisting of 74 channels, granting the Japanese conglomerate a significant market share at a time when the media landscape in India is being reshaped by consolidation. It is expected that Sony’s holding in the merged entity will be 53 per cent, and the company has also committed to investing a substantial $1.6 billion to further expand its footprint.

Impact on Zee’s Financials

Since the merger was announced, Zee’s net profit has witnessed a substantial decline. In the financial year 2022-23 (FY23), their net profit plummeted to Rs 48 crore from the previously reported figures of Rs 956 crore in FY22 and Rs 793 crore in FY21. This downturn highlights the importance of effectively concluding the merger in order to stabilize Zee’s financial performance and unlock the potential synergies of the combined entity.

 

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Overall, the board meeting today holds immense significance for both Sony and Zee Entertainment. The decision made will shape the future of the Indian media industry and open doors to new opportunities and challenges. Industry stakeholders and investors eagerly await the outcome of this crucial meeting, as it will determine the trajectory of these two influential players in the broadcast and entertainment sectors.

 

Source:business-standard.com

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