Punit Goenka, Zee Entertainment’s Managing Director and CEO, has proactively offered to step down from his chief executive role, anticipating the impending deadline for the $10 billion Zee-Sony merger on January 20. The Sony Group Corp has scheduled a board meeting for Friday to make a pivotal decision regarding the merger, initially proposed two years ago to create India’s largest broadcast company. Strained negotiations and unresolved issues have brought the merger under scrutiny. Disagreements between Sony and Zee, particularly concerning the leadership of the merged entities, persist. Sony advocates for its India MD and CEO, NP Singh, to assume the interim chief executive role unless Goenka is exonerated in all pending cases.
Zee Entertainment’s Shares Get a Boost Amid Zee-Sony Merger Uncertainty
On Thursday, Goenka’s offer to step down from the CEO role post-merger triggered a more than seven per cent rally in Zee Entertainment shares yesterday. However, Zee has yet to approve N P Singh’s appointment as the head of the merged corporation.
The Zee-Sony merger deal, initially anticipated for completion by December 20, 2023, faced a one-month grace period extension to address ongoing issues, expiring on Saturday, January 20. Earlier this month, reports of the merger falling through emerged, vehemently denied by Zee. In an official statement, Zee reiterated its commitment to the merger with Sony, actively working towards a successful closure. Sony, on the other hand, has not issued any official statement to the exchanges.
Sony-Zee Merger Aims for Fourth-Largest Indian Media Company
The deal goes through, the merged entity will transform into India’s fourth-largest media company, with Google, Meta, and Disney-Star currently occupying the top three positions. Zee presently commands an 18 per cent market share in the Indian entertainment and broadcasting sector, surpassing Sony’s six per cent.
The proposed merger sets out to establish a robust 74-channel powerhouse, offering the Japanese group a substantial market share during a period of media landscape consolidation in India. Sony is poised to hold a 53 per cent stake in the combined entity and has committed to infusing $1.6 billion for expansive growth. Since the merger announcement, Zee’s net profit has experienced a significant downturn, plummeting to Rs 48 crore in financial year 2022-23 (FY23) from Rs 956 crore in FY22 and Rs 793 crore in FY21.