Sony calls off $10bn merger with Zee Entertainment in India

Sony’s $10bn merger between its Indian division and Zee Entertainment Enterprises is off after more than two years of negotiations.

The deal has been beset by regulatory issues, with reports emerging earlier this month that the Japanese giant was close to scrapping the merger.

Sony has now done just that, sending a letter to Zee to terminate the proposed deal, and adding that it was “extremely disappointed that the conditions to the merger were not satisfied” by the 21 January deadline.

The Japanese firm added that it “remained committed” to expanding its presence in India, despite the set-back with Zee.

Sony has reportedly demanded a $90m termination fee with Zee because of “alleged breaches” of terms, something that Zee said it “categorically denies”.

The Indian firm said it would “take all the necessary steps” to protect itself, “including by taking appropriate legal action.”

The merged had been in the works since December 2021 and would have seen around 70 channels coming under one roof, as well as streaming operations and a sprawling studio business.

However, Zee missed a 21 December deadline to formally close the merger having failed to dispose of certain assets, while disagreements remain around who would run the merged company.

Zee’s Punit Goenka had been lined up for the role but was subsequently banned from leading any company by local regulators for allegedly diverting funds. Although that ruling was subsequently overturned, Sony reportedly still held doubts.

The Indian media giant has also seen its earnings fall over recent months, with earnings before interest, tax, depreciation and amortisation (EBITDA) falling almost 40% in 2023 as content costs soared.

The deal, which had been given final regulatory clearance in August, would have created a media giant in India, whose landscape has been in flux over recent months. Disney recently held discussions to create a joint venture between its Star business and Reliance Industries.

The Mouse House has seen its Disney+ Hotstar streamer hit over the past 12 months, after it lost streaming rights to IPL cricket.