During an recent earnings call on May 17, Zee Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka began with an update on the legal front about the failed Zee-Sony merger. Goenka said, “As you would have read in our communication issued in April 2024, the Company has withdrawn its merger implementation application from the National Company Law Tribunal (NCLT). This decision will enable the Company to sharply focus on growth and strategic opportunities, in order to generate higher value for all shareholders.”
He added, “That said, the Company will continue to aggressively pursue the arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums.”
On May 23, Zee stated in a regulatory filing that it has terminated the merger cooperation agreement (MCA) and has sought a termination fee of $90 million from Sony-group owned Culver Max Entertainment Pvt. Ltd. and its entity Bangla Entertainment Pvt. Ltd. (BEPL) for failing to comply with obligations under the MCA.
“Culver Max and BEPL have failed to comply with their obligations under the Merger Cooperation Agreement (MCA). Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to USD 90,000,000, in accordance with the MCA,” said Zee in an exchange filing.
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This is four months after Sony had said ZEE failed to satisfy merger conditions and initiated arbitration proceedings before Singapore International Arbitration Centre (SIAC) claiming $90 million as a termination fee for alleged violations of MCA. ZEE initiated legal actions to contest Sony’s claims before SIAC.
Recently, Zee’s regulatory filings revealed that the company spent Rs432 crore on merger-related costs between 2022 and 2024. The breakdown shows costs reaching Rs 256 crore in 2023-2024, with Rs 176 crore spent the previous year.
After two years, Sony called off merger with Zee on January 22, 2024, which kickstarted court proceedings.
Read more: Failed Zee-Sony merger cost Zee a whopping Rs 432 crore
During the latest earnings call, Goenka said the arbitration proceedings in Singapore are continuing. “We have withdrawn from NCLT only because we did not see any movement coming from Sony side in terms of any resolution,” Goenka added, referring to Zee’s decision to withdraw the merger implementation application filed before the Mumbai bench of the NCLT against Sony India. ZEE had filed the application in January 2024, after Sony called off their proposed merger which would have created a $10-billion mega media entity.
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Addressing a question about rumours about mergers with other entities, Goenka said, “There’s a lot of rumours in the market that go around, especially for Zee, because we are in the media business and rumours has become part and parcel of our life. But please don’t go on any rumours from that point of view… Whether we want to merge with any other entity or not, I would not like to comment on that until we have some more clarity there.”
Goenka added, “This is only one quarter that we have gone through of seeing good results. We’ve just come out of the NCLT proceedings of withdrawing our application. The focus of the organization is to rebuild the business and get it back on track. And therefore, that’s the only thing that we are focused and working towards.”