The Securities Appellate Tribunal (SAT) on Monday will continue the hearing of Zee Entertainment Enterprises' plea, challenging market regulator Sebi's interim order. Besides, the National Company Law Tribunal (NCLT) hearing on the potential merger of ZEEL with Sony Pictures Networks India is also today (26 June).
Zee Entertainment Enterprises Chairman Emeritus Subhash Chandra and managing director and CEO Punit Goenka have challenged the Sebi order at SAT.
On 19 June, the SAT refused to give any interim relief to Essel Group chairman Subash Chandra and his son after the markets regulator barred them from holding the position of a director or key managerial personnel in any listed company or allegedly siphoning off funds of the media firm.
However, the counsel representing Zee Entertainment Enterprises said that the market regulator had no evidence beyond the bank statements to prove the allegations of round-tripping of funds and that Sebi cannot pass an ex-parte order.
The counsel said Zee Entertainment Enterprises wanted a stay on the Sebi order.
"All entities through which Sebi alleges round-tripping, have genuine business relations with Zee," the counsel further added.
Financial services company BofA Securities have not given any rating to Zee Entertainment as it seeks clarity on the Sony-Zee merger. BofA said Zee Entertainment's fundamentals are deteriorating on the back of three factors -- weak business, risks on the merger front, and the SEBI investigation.
The report said SEBI's interim order against Zee promoters puts risks to the merger with Sony.
"It remains unclear in what direction the merger will go and would Zee promoters will be finally barred or not. However, the risks of the merger with Sony going through have increased. It also remains unclear if Goenka would be able to be the CEO of the joint entity," it added.
Last week Sony Pictures Entertainment (SPE) said it will continue to monitor developments that may affect the merger deal. Sony Pictures added, "We take very seriously the SEBI interim order and will continue to monitor developments that may affect the deal".
Next day Punit Goenka affirmed that the merger between ZEE Entertainment and the Indian unit of Japan's Sony will go through, "whether or not" he is the CEO of the merged company.
In September 2021, SPNI and ZEEL entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations, and programme libraries. The combined entity will own over 70 TV channels, two video streaming services (ZEE5 and Sony LIV), and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.
Shareholders of ZEEL had given their ascent to the merger last year in October, weeks after the Competition Commission of India gave its conditional nod.
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