Sony tells Zee it’s terminating the $10 billion India merger

Sony called off the merger between its India unit and Zee Entertainment on Monday, ending a two-year acquisition deliberation that would have created a $10 billion media powerhouse in the South Asian market.

Sony said in a statement that it has sent a termination letter to Zee after the Indian firm failed to meet the conditions, despite a 30-day extension. Sony said it was “extremely disappointed” that the Indian firm failed to meet the conditions.

“The definitive agreements further provided that if the parties are unable to agree upon such an extension by the end of the discussion period, any party could terminate the definitive agreements by providing written notice. The merger did not close by the end date as, among other things, the closing conditions to the merger were not satisfied by then,” Sony said in a statement.

Sony Pictures Networks India, the Indian arm wholly-owned by the Japanese conglomerate, was pushing for the removal of Zee’s chief executive Punit Goenka from staying on with — and leading — the merged entity following the deal, according to people familiar with the matter. Goenka fought back for months, but local media reported last week that he may agree to the terms.

Sony also sought for Zee to improve its finances, something that has only grown worse in recent quarters. The two firms announced their intention to merge the entities in September 2021. The deal would have created a $10 billion media powerhouse in India, where billionaire Mukesh Ambani is increasingly flexing his wealth and reach.

Ambani’s Reliance is in advanced stages of talks to acquire a 51% stake in Disney’s India business, which includes the streaming service Hotstar.

Zee and Sony have been important fixtures in the Indian TV industry for the last 25 years. Sony launched Sony Entertainment Television in India in 1995 and has aired some of the most memorable shows including “Indian Idol,” and “Kaun Banega Crorepati,” an official Hindi adaptation of “Who Wants to be a Millionaire?”

The firms also operate on-demand streaming services such as Zee5 and SonyLiv that compete with dozens of other players including Netflix, Amazon Prime Video and Disney’s Hotstar and Ambani’s JioCinema.