Punit Goenka – The hearing in the Zee-Sony merger case has been postponed until next week by the National Company Law Tribunal (NCLT). The case will now be heard by the NCLT on July 10.
The much-anticipated merger of two industry titans, Zee Entertainment Enterprises and Sony Group Corp, has been delayed for a variety of reasons. Zee and Sony inked a comprehensive merger agreement in December 2021.
On May 11, the NCLT asked the exchanges to examine and certify the merger’s non-compete clause, which had been approved by market regulator Securities and Exchange Board of India (Sebi).
The NCLT directed that the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) reconsider their approval of the Zee-Sony merger.
In June, markets regulator Sebi barred Subhash Chandra and Punit Goenka from serving as directors or key management persons (KMP) in any listed business or its subsidiaries until further orders were issued in connection with the alleged syphoning off of funds from Zee Entertainment.
On Thursday, Zee’s counsel informed the tribunal that Punit Goenka is not the corporation and that the programme should not be halted.
He further stated that the strategy has the approval of all regulators. Objectors cannot sit in on the decision of regulators.
On February 22, the Mumbai bench of the National Company Law Tribunal directed that CIRP be initiated against Zee and that an interim resolution expert be appointed to suspend the board. However, the NCLAT quickly delayed this on February 24 due to Goenka’s petition.
In June, the NCLAT overturned the NCLT order directing the NSE and BSE to rethink its approval of the Zee-Sony merger.
A lawyer for Zee told NCLAT that the Sony acquisition had gotten all essential clearances but would be halted due to the beginning of corporate insolvency procedures.
Zee settles a regulatory inquiry
Additionally, Zee Entertainment has resolved a regulatory investigation into the disclosure of information about pledged shares that was delayed.
The media company was being investigated by the Sebi for allegedly reporting the invocation of pledged shares after a delay from January 1 to December 26, 2019.
Merging of Zee and Sony
According to the planned merger, Zee’s founders will own a 3.99% portion in the new combined company, while Sony Pictures Entertainment will indirectly own a 50.86% stake in. The public and other shareholders will own the remaining 45.15%. Sony will also pay the Essel Group’s promoters a non-compete fee of Rs. 1,100 crore.
The merger was approved by the Competition Commission of India (CCI) in 2022 after facing numerous obstacles and conflicts with shareholders.
The merger between Sony and Zee is likely to be finished by the first half of the current fiscal year, which ends on March 31, according to Kenichiro Yoshida, chairman and chief executive officer of Sony Corp.
JM Financial stated in a note dated June 28 that the Sony-Zee merger is equally important for Sony as it is for ZEE Entertainment.
With 7% TV viewership, Sony has the least among major broadcasters, therefore its market position is not impressive. The unstable state is a result of India’s changing media environment. The number of Pay-TV households (HHs) seems to have peaked. As digital consumption eats up more TV time, TV viewing is falling downward. Urban HHs, Sony’s core TG, are rapidly adopting OTT/CTV.