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Business News/ Companies / News/  Sony optimistic about India, exploring alternatives after Zee merger fallout, says executive
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Sony optimistic about India, exploring alternatives after Zee merger fallout, says executive

Following the failed merger with Zee, Sony plans to pursue growth opportunities independently in India due to its significant long-term potential. The company aims to invest strategically and explore new avenues for expansion in the Indian market.

File image of a man walking past the Sony logo outside the company's headquarters in Tokyo. Sony confirmed on January 22, 2024 that it is pulling out a merger of its Indian business with local rival Zee Entertainment. (Photo by Richard A. Brooks / AFP)Premium
File image of a man walking past the Sony logo outside the company's headquarters in Tokyo. Sony confirmed on January 22, 2024 that it is pulling out a merger of its Indian business with local rival Zee Entertainment. (Photo by Richard A. Brooks / AFP)

Hiroki Totoki, President, COO & CFO of Sony, said the company is optimistic about future plans in India. In a recent earnings call on February 14, he stated that while the merger of Sony's Indian arm with Zee is terminated, they are committed to the Indian market.

"India on a long-term basis has great growth potential. It's a very appealing market. Therefore, we will try to seek various opportunities and if we can find another opportunity that would replace this type of plan," said Totoki.

Also Read | Zee plans to cut costs, reduce overlaps after merger with Sony collapses

Sony's Strategy in India

Despite the termination of the proposed merger with Zee, Sony remains committed to pursuing growth opportunities in India. Totoki mentioned in the investors' call that the company will continue to pursue organic growth, following its established strategy in India, where it operates through Culver Max Entertainment (formerly known as Sony Pictures Network India).

Addressing concerns about the investment committed as part of the deal, Totoki said, "Well, that investment is not going to change capital allocation or our behaviour in our investment. So at the moment, we do not have any concrete plans."

Also Read | Zee-Sony split up. Now streaming studios are sulking

As per the merger conditions agreed upon between Sony and ZEEL, the Japanese giant was supposed to invest $1.5 billion in the merged entity.

Legal Developments and Background

Last month, Sony terminated the agreement with Zee Entertainment Enterprises (ZEEL) to merge its Indian entities – Culver Max Entertainment and Bangla Entertainment – with ZEEL. Sony initiated arbitration proceedings before the Singapore International Arbitration Center (SIAC), claiming $90 million as a termination fee.

Also Read | Zee-Sony: What next after the merger collapse?

ZEEL, in response, filed a petition before the National Company Law Tribunal (NCLT), seeking a direction to Sony Group to implement the merger scheme. On February 4, SIAC denied Sony Group's interim plea to restrain ZEEL from moving NCLT to enforce the failed merger.

The NCLT had approved the scheme of merger on August 10, 2023, which could have created a $10 billion media entity. The combined entity would have owned 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 the country.

Also Read | Zee-Sony: A deal that was doomed from the start

Sony Pictures Network India, an indirect wholly-owned subsidiary of Sony Group Corporation, Japan, owns 26 channels operating in Hindi and other languages, with a viewership of over 700 million. The company also has the OTT platform Sony LIV, with around 33 million viewers, streaming live sports, movies, short films, and original content. The recorded revenue for FY23 stood at 6,684 crore.

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Published: 17 Feb 2024, 09:29 AM IST
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