Sony and Zee clashed over the Indian media firm’s failure to dispose of some Russian assets and its $1.4 billion Disney cricket rights deal, before their India merger was scrapped, Reuters is reporting after reviewing internal emails. As previously reported, Sony and Zee disagreed over more than 20 compliance issues.
“Emails exchanged between December 20 and January 9 show executives from both companies accusing each other of not honouring the merger commitments,” Reuter reports. “Zee executives repeatedly said that there was nothing out of line, and asked Sony to extend the closure deadline.”
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The report states that Zee’s top India counsel Shyamala Venkatachalam accused Sony of attempting to “depict a narrative which has no basis in facts”, saying Zee was dismayed by what it called was a “sudden volte face” from the company in bad faith.
In the days following the collapse of the merger, Zee Entertainment informed the Walt Disney Company that it does not intend to progress with $1.4 million deal to purchase the cricket TV rights that it acquired from the U.S firm.
After two years of intense negotiations, the Zee-Sony merger ended after Sony called off the deal claiming several breaches by ZEE.
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The following contentious issues caused a face-off between the two entities according to the internal emails reviewed by Reuters. The merger agreement had stipulated no dealings with entities based in countries under U.S. sanctions. But Zee’s assets in Russia, four subsidiaries that dealt in content creation and distribution, were a sticky point. Zee replied saying the divestment process had not been completed due to changing regulations in Russia, which is at war with Ukraine. The other is Zee’s 2022 decision to enter into a $1.4 billion deal with Disney to purchase certain TV cricket rights for India. Reuters reports that Sony said Zee had decided to furnish a bank guarantee and a deposit totaling $406 million for that deal. “And Zee’s bid to take debt for the deal, which was “without prior written consent” of Sony, took the Indian firm’s total debt to more than $451 million – above the merger agreement threshold.” As per the emails, Sony said it had raised its concerns and reservations several times in relation to the Disney matter. However, Zee said the Sony’s allegations came too late, calling them “reprehensible and unfortunate”.