New Delhi:

Zee Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India on Tuesday said they have settled their six-month-long dispute related to the failed USD 10-billion merger and have agreed to withdraw all claims against each other.

As part of the “comprehensive non-cash settlement” between ZEEL and Culver Max Entertainment Pvt Ltd (CMEPL), both “have mutually agreed to withdraw all respective claims against each other, in the ongoing arbitration at the SIAC and all related legal proceedings initiated in the NCLT and other forums,” said a joint statement.

“The companies will also withdraw the respective Composite Schemes of Arrangement from the NCLT and inform the relevant regulatory authorities,” it said.

Both Zee and Sony had claimed a termination fee of USD 90 million (around Rs 748.7 crore) from each other for not complying with the Merger Cooperation Agreement (MCA) signed in December 2021.

Sony had moved before the Singapore International Arbitration Center (SIAC) immediately two days after the termination of the deal, saying ZEEL did not satisfy the merger conditions, initiated arbitration proceedings and claimed a termination fee of USD 90 million.

This was contested by ZEEL before the SIAC, which denied any interim relief to the Sony group against the Indian broadcaster.

ZEEL also moved the National Company Law Tribunal (NCLT) seeking implementation of the proposed merger and later withdrew its plea.

Later in May, ZEEL terminated the MCA by issuing a letter dated May 23, 2024, and it also sought a termination fee of USD 90 million from two Sony Group entities — Sony Pictures Networks India (SPNI), now known as Culver Max Entertainment, and Bangla Entertainment (BEPL).

Sony Pictures Networks India is the consumer-facing identity of CMEPL, a wholly-owned subsidiary of Sony Group Corporation, Japan.

Under the settlement terms, none of the parties will have any “outstanding or continuing obligations or liabilities” to the other, the joint statement said.

“The settlement stems from a mutual understanding between the companies to independently pursue future growth opportunities with a renewed purpose and focus on the evolving media & entertainment landscape, signifying the definitive conclusion of all disputes,” it said.

In January this year, Sony had pulled out from the proposed USD 10.5-billion merger with ZEE Entertainment Enterprises Ltd citing failure to meet certain “closing conditions” by the Indian firm.

ZEEL and SPNI had agreed to merge on December 22, 2021.

The Mumbai bench of NCLT had on August 10, 2023, approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment and BEPL, which could have created a USD 10 billion media entity.

However, two years after that Sony Corporation announced the termination of the agreement on January 22, 2024.

After the termination of the deal, both companies are pursuing their independent course. ZEEL is facing financial hurdles, which it is trying to handle through several initiatives. It has reported a net profit of Rs 118 crore in the first quarter of this fiscal. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

ZEEL has, on account of Culver Max’s and BEPL’s breaches under the Merger Cooperation agreement, terminated the MCA by issuing a letter dated May 23, 2024. 
| Photo Credit: Reuters

Zee Entertainment Enterprises has sought a termination fee of $90 million (around ₹748.7 crore) from the Sony Group for calling off the $10 billion merger deal in January this year.

It has sought termination fees from two Sony Group entities — Sony Pictures Networks India (SPNI), now known as Culver Max Entertainment, and Bangla Entertainment (BEPL), according to a regulatory filing from Zee Entertainment Enterprises Limited (ZEEL) on May 24.

ZEEL has, on account of Culver Max’s and BEPL’s breaches under the Merger Cooperation agreement (MCA), terminated the MCA by issuing a letter dated May 23, 2024. “The company has sought a termination fee from Culver Max and BEPL under the provisions of the MCA,” it said.

“Culver Max and BEPL have failed to comply with their obligations under the MCA. Therefore, the company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to $90 million in accordance with the MCA,” it said.

Earlier on January 22, 2024, Sony Group Corporation (SGC) had said that ZEEL did not satisfy the merger conditions and initiated arbitration proceedings before the Singapore International Arbitration Centre (SIAC) claiming $90 million as termination fee.

This was contested by ZEEL before the SIAC, which denied any interim relief to the Sony group against the Indian broadcaster. ZEEL had moved the National Company Law Tribunal seeking implementation of the proposed merger and later withdrew its plea.

“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 by issuing a letter dated May 23, 2024, and sought a termination fee from Culver Max and BEPL in accordance with the provisions of the MCA,” the filing said. ZEEL and SPNI had entered into an agreement to merge on December 22, 2021.

On August 10, 2023 the Mumbai Bench of NCLT approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment and BEPL, which could have created a $10 billion media entity.

However, two years after that Sony Corporation announced the termination of the agreement on January 22, 2024.

Zee Entertainment logo
| Photo Credit: Reuters

ZEE Entertainment Enterprises Ltd on Tuesday said it has withdrawn its application, seeking implementation of the merger with Sony, filed before the National Company Law Tribunal Mumbai bench.

The company filed an application with the NCLT on January 24, 2024, seeking directions on the implementation of a composite scheme of arrangement between ZEE Entertainment Enterprises Ltd (ZEEL) and Sony group firms Culver Max Entertainment Pvt Ltd and Bangla Entertainment Pvt Ltd.

Earlier on January 22, Sony Group Corp called off a $10 billion merger of its India unit with ZEEL, following a stalemate over who will lead the merged entity. The deal was announced more than two years back. Sony had sought USD 90 million as break-up fees for violating the terms of the merger pact and invoked arbitration.

In a statement on Tuesday, ZEEL said the steps taken by it to withdraw the implementation application from NCLT are based on the legal advice received by the board.

“This decision will also enable the company to pursue growth and evaluate strategic opportunities to generate higher value for all shareholders. The Board remains committed to reviewing the strategic action-oriented steps taken by the management and providing timely guidance,” it added.

The company further said, “This decision to withdraw the implementation application will enable the company to continue to aggressively pursue all its claims against Sony in the ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums”.

Sony has already withdrawn its merger application from the NCLT after filing arbitration before SIAC.

On the reasons behind the decision, ZEEL Chairman R. Gopalan said the immediate priority for the company is to focus on performance and achieve its targeted goals for the future.

“We have reviewed the key steps taken by the management over the last few months that are result-oriented, and we believe that the company is well poised to chart a stronger growth trajectory,” he added.

Hence, after seeking an independent legal opinion, the board has advised the management of the company to withdraw the implementation application filed before the NCLT, Gopalan said.

“The board remains focused towards maximising shareholder value, strengthening the company’s claims in arbitration and enabling the company to explore strategic opportunities,” he noted.

Recently, ZEEL management initiated a process of rationalisation of the workforce by 15 per cent to prune staff strength across the company while its MD and CEO Punit Goenka took a 20% cut in his remuneration.

The board had also instituted a Monthly Management Mentorship (3M) Program to regularly review and advise the management on critical business aspects.

“The concerted efforts being taken by the board and the management are aimed towards achieving robust growth to consistently generate higher value for shareholders,” the statement said.