The prolonged Zee-Sony merger, spanning nearly two years, is likely to see a closure this week. Sources suggest that this week’s announcement will unveil the leadership of the merged entity.
As the December 21 deadline for the deal closure approaches, speculation is growing among stakeholders regarding a potential revision to the initial leadership arrangement in the Zee-Sony merger. Initially, the agreement designated Punit Goenka, MD and CEO of Zee Entertainment Enterprises Ltd (ZEEL), as the future MD and CEO of the merged venture.
In this structure, Sony Pictures Networks India (SPNI) was set to own 50.86 percent, Zee’s promoters 3.99 percent, and the remaining 45.15 percent was to be allocated to public shareholders.
However, Sony Group Corp is now pushing for its India MD and CEO, NP Singh, to take over as the CEO of the newly formed Zee-Sony entity. This suggestion, according to them, is prompted by strict corporate governance norms in Japan and the US.
Sources close to the matter indicate that Sony may stick to their new proposal, given the fact that Goenka doesn’t have Securities and Exchange Board of India’s (SEBI) blessings even if the Securities Appellate Tribunal (SAT) has cleared him to takeover of as the CEO of the merged entity,
Earlier in August this year, just days after the NCLT (National Company Law Tribunal)’s approval of the Zee-Sony merger, SEBI issued an order preventing Zee promoters Punit Goenka and Subhash Chandra from assuming any significant management roles in Zee Entertainment Enterprises Ltd, Zee Media Corporation Ltd, Zee Studios Ltd; Zee Akaash News Pvt Ltd; any resultant company that is formed pursuant to a merger or amalgamation of the above named companies with any other company, wholly or in part or any company, which is formed pursuant to demerger of any of the above named companies.
The SEBI order not only addressed regulatory concerns but also highlighted that Punit Goenka is set to assume the role of managing director post-merger, which entails significant managerial responsibilities.
“That very role in ZEEL is under question and therefore, till the final outcome of the proceedings in the instant matter, it would be appropriate that he is not part of the management of ZEEL or any corporate avatar of it,” said the order.
SEBI’s final order in the matter could be expected within a period of eight months, the regulatory body had said in August.
The leadership struggle between Goenka and Singh in the Zee-Sony merger highlights the complexities and challenges inherent in such large-scale corporate amalgamations, said experts.
“This tussle isn’t just about individual capabilities; it delves into deeper issues of corporate governance and regulatory compliance, which are crucial for the stability and future prospects of a merged entity,” said Sonam Chandwani, Managing Partner KS Legal & Associates.
Who will make a better leader for the media powerhouse worth $10 billion?
“Goenka, with his deep roots in Zee and understanding of its corporate culture, might bring continuity and a sense of familiarity to the merged entity. However, Singh, potentially offering a fresh perspective and possibly new strategies, could be instrumental in steering the merged company through new challenges and opportunities in a rapidly evolving media landscape,” said Chandwani.
The uncertainty surrounding the top leadership position raises questions not only about the merger’s specifics but also about the overall corporate governance standards of the combined entity.
The future for the company will hinge on how effectively it can blend the strengths of both organisations under a leadership that is not only visionary but also grounded in ethical and effective governance practices.
‘The decision will set a precedent and could significantly influence the direction and success of the merged entity in a competitive market,” Chandwani added.