More than two years after announcing a bold $10 billion merger of its TV and streaming businesses in India with local giant Zee Entertainment, Sony Group said Monday that it is officially abandoning the deal.
“After more than two years of negotiations, we are extremely disappointed that closing conditions to the merger were not satisfied by the end date,” Sony said in a statement Monday from its offices in India. “Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline.”
It added: “We remain committed to growing our presence in this vibrant and fast-growing market and delivering world-class entertainment to Indian audiences.”
Although Sony did not specify on Monday the conditions of the merger that went unfulfilled, a disagreement between the two companies over who would lead the combined entity spilled into public view in recent months. Zee has pushed for the continued leadership of its CEO Punit Goenka at the helm, but Sony was known to dislike that idea due to an investigation into Goenka’s conduct by India’s capital markets regulator. The Securities and Exchange Board of India alleged last June that Goenka and his father, Zee’s founder Subhash Chandra, abused their corporate positions to siphon off funds from the company for private ventures.
The deal breakdown is a considerable setback for both Sony and Zee, which were looking to increase their scale at a time of growing consolidation and digital disruption within the fast-moving Indian entertainment landscape. According to local reports, Reliance Industries, India’s most valuable company, and former market leader Disney signed a nonbinding term sheet late last year outlining a proposed merger of their Indian entertainment assets. Meanwhile, Netflix, Amazon Prime Video and other major players continue to invest heavily in India, now the world’s most populous country.
Estimated to be worth $10 billion, the Zee-Sony pact would have created a powerhouse with more than 70 linear TV channels, two streaming services (ZEE5 and Sony LIV) and two legacy film studios (Zee Studios and Sony Pictures Films India) with rich libraries of local content.
Zee’s financial health has deteriorated significantly since the merger was first announced, however. In the wake of Monday’s news, regional analysts were already scrambling for fresh takes on what Sony’s new acquisition targets might be — and whether the group could even revisit a merger with Zee at better terms if Goenka is ousted — or if Sony Pictures Networks India is now best viewed as a buyout target.