Sony Group has reportedly called off a $10 billion merger deal with Zee Entertainment, citing a disagreement over leadership roles within the combined entity.
The merger, which was announced over two years ago, would have been crucial for both companies to survive in India’s highly competitive market. However, the deal failed to meet its agreed-upon conditions, and Sony sent a termination letter to Zee on January 22, citing unmet conditions as the primary reason for the termination.
The deadlock in merger negotiations centred around the leadership of the combined company, with Zee proposing CEO Punit Goenka and Sony objecting due to an ongoing market regulator probe into Goenka. The impasse remained unresolved despite Zee’s efforts for “good faith negotiations.”
The collapse of the deal could have a negative impact on both parties, particularly as global streaming giants like Netflix and Amazon.com are vying for market share in India.
Zee Entertainment is already grappling with declining profits, advertising revenue, and cash reserves. Additionally, the company’s four-year pact with Disney’s Star for TV broadcasting rights of certain cricket events is at risk, potentially costing Zee US$1.32 billion to US$1.44 billion over the agreement’s tenure.