A primer on the two-year-old Zee-Sony merger saga

As the two parties discuss a possible extension of the deadline, we revisit the developments of the tumultuous journey surrounding the $10-billion merger.

December 21, 2023 was supposed to be the cut-off date for concluding the Zee-Sony $10-billion merger. However, just four days before the date, Zee sought an extension and now the two parties have agreed to enter into ‘good faith negotiations' to discuss the possible extension. This is just the latest in a two-year-long saga that has seen several hurdles. 

The merger is expected to create the largest media conglomerate in the country, commanding a market share of over 28 per cent, and is supposed to bring 75 channels, two video streaming services (Zee5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India) under a single umbrella. After the merger, Sony will indirectly hold a majority of 50.86 per cent of the new entity, while the founders of ZEEL will hold 3.99 per cent. Other ZEEL shareholders will hold a 45.15 per cent stake.

We look back on all that has transpired in the last two years. 

September 21, 2021: The board of directors of ZEE Entertainment Enterprises (ZEEL) unanimously gave an in-principle approval for the merger between Sony Pictures Networks India (SPNI) and ZEEL.

December 21, 2021: After the completion of the 90-day due diligence period, the board of directors approved the merger of ZEEL and Bangla Entertainment, an affiliate of Culver Max Entertainment (formerly known as Sony Pictures Networks India), in Culver Max Entertainment.

February 2022: On February 4 private sector lender IndusInd Bank filed a plea before the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against ZEEL. It claimed a default of Rs 83.08 crore. On February 21, ZEEL moved an application before the NCLT requesting the dismissal of the plea.

July 29, 2022: The merger received approval from stock exchanges BSE and NSE.

October 4, 2022: The Competition Commission of India (CCI) gave its approval to the merger subject to certain “voluntary structural remedies” proposed by the parties.

December 2022: IDBI Bank moved the NCLT against ZEEL seeking an insolvency proceeding against the media firm to recover dues of Rs 149.60 crore.

February 22, 2023: NCLT accepted insolvency proceedings against ZEEL in response to IndusInd Bank’s petition. It claimed a default of Rs 83.08 crore against Subhash Chandra. 

May 2023: The NCLT directed the National Stock Exchange and Bombay Stock Exchange to reconsider their initial approvals for the merger.

June 12, 2023: The Securities and Exchange Board of India (SEBI) banned Subhash Chandra and Punit Goenka from holding any managerial or directorial positions in ZEEL after it found out that the father and son were siphoning off funds for their own benefit. 

August 10, 2023: The NCLT gave its nod to the merger and dismissed all objections regarding the merger from creditors such as Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp, and IDBI Trusteeship.

August 14, 2023: SEBI issued a confirmatory order on the case barring Punit Goenka and Subhash Chandra from key managerial and executive positions at ZEEL. SEBI said it will complete its investigation on the matter of misappropriation in eight months. Meanwhile, Goenka and Chandra can not hold directorial or managerial positions in Zee Entertainment and three other group companies.

August 26, 2023: Punit Goenka moved the Securities Appellate Tribunal challenging SEBI’s confirmatory order. It appealed to the tribunal to put a stay on the effect and operation of the regulator’s order.

September 2023: IDBI Bank and Axis Finance challenged NCLT’s August 10 approval for the merger in the National Company Law Appellate Tribunal (NCLAT). Meanwhile, JC Flowers Asset Reconstruction Company, the asset reconstruction arm of Yes Bank, worked out a one-time settlement (OTS). Against an outstanding debt of Rs 6,500 crore, Chandra would pay JC Flowers Rs 1,500 crore to regain ownership of the family’s stake in assets, including Dish TV and Zee Learn, as well as three properties.

October 30, 2023: The Securities Appellate Tribunal (SAT) quashed SEBI’s order restraining Punit Goenka from holding the post of MD and CEO of Zee. It said that in the event that something material comes up during the ongoing SEBI investigation, then appropriate procedures can be adopted in accordance with the law.

November 2023: With Goenka remaining under the scanner, Sony sought that NP Singh, MD & CEO of Sony India, lead the merged entity instead of the earlier-agreed Goenka.

December 3, 2023: IDBI Trusteeship lodged an appeal at the NCLAT against Essel Group chairperson Subhash Chandra, contesting NCLT’s approval for the merger. 

December 15, 2023: The NCLAT issued notices to ZEEL over the petitions filed by IDBI Bank and AXIS Finance against the NCLT order approving the merger. However, it declined to grant any stay over the merger process during the pendency of the hearing.

December 17, 2023: Zee Entertainment sought an extension of the deadline for the merger.

December 19, 2023: Sony issued a statement saying that it looks forward to hearing ZEE’s proposals and how they plan to complete the remaining critical closing conditions.

December 20, 2023: ZEEL said it is in talks with Sony about extending the merger deadline.