Zee demands $90 million in termination fee from Sony for calling off merger

On 22 January, Sony Group Corp., the Japanese parent of Sony Pictures Networks India (SPNI) and Bangla Entertainment Pvt. Ltd (BEPL), had announced the termination of the $10-billion merger agreement with ZEEL, while seeking $90 million for breach of conditions besides initiating arbitration.

Lata Jha
First Published23 May 2024
In February, the Siac had denied an interim relief on Sony Group Corp.’s request to stop Zee from approaching an Indian corporate court in the scrapped merger of the media firms.
In February, the Siac had denied an interim relief on Sony Group Corp.’s request to stop Zee from approaching an Indian corporate court in the scrapped merger of the media firms.(Reuters)

New Delhi: Zee Entertainment Enterprises Ltd has asked Sony Group Corp’s India unit to pay a termination fee of $90 million for calling off a merger deal that would have created a $10-billion media behemoth in the country.

“This is with respect to the termination of the Merger Cooperation Agreement (MCA) dated 22 December 2021 between Zee Entertainment Enterprises Ltd and Culver Max Entertainment Pvt. Ltd and Bangla Entertainment Pvt. Ltd…and the Company’s application before the National Company Law Tribunal, Mumbai seeking directions to implement the Composite Scheme of Arrangement and the withdrawal of the said application. We hereby wish to inform you that the Company has, on account of Culver Max’s and BEPL’s breaches under the MCA, terminated the MCA and sought a termination fee from Culver Max and BEPL in accordance with the provisions of the MCA,” Zee has said in a letter to the exchanges.

On 22 January, Sony Group Corp., the Japanese parent company of Sony Pictures Networks India (SPNI), which is now called Culver Max Entertainment, and Bangla Entertainment Pvt. Ltd (BEPL), had announced the termination of the $10-billion merger agreement with ZEEL, while seeking $90 million for breach of conditions besides initiating arbitration.

Zee Entertainment had then initiated legal action to contest Sony's claims of $90 million (around  748.5 crore) as a termination fee, for which the Japanese firm moved the Singapore International Arbitration Centre (Siac).

In February, the Siac had denied an interim relief on Sony Group Corp.’s request to stop Zee from approaching an Indian corporate court in the scrapped merger of the media firms.

The merger between two of the largest media companies was seen as one of the biggest in the Indian media and entertainment sector, before Sony called it off and demanded compensation for Zee breaching terms of the agreement.

In the past few weeks, Zee has been on a mission to restructure business, reduce cost and improve its Ebitda margins.

Punit Goenka, manging director and chief executive officer, has taken a 20% pay cut himself, and also announced a 15% reduction in overall headcount.

The company has also seen a series of senior-level exits, including Rahul Johri, president of business; Punit Misra, president of content and international markets; Nitin Mittal, president and group chief technology officer; and Shariq Patel, chief business officer, Zee Studio.

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