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Sony scraps merger with India’s Zee

The collapse blows the chance for both firms to better compete with international streaming rivals.

The Japanese firm says it ‘issued a notice terminating the definitive [merger] agreements’ by the two companies [File: Philip Fong/AFP]Published On 22 Jan 202422 Jan 2024

Sony has announced that it is pulling out of a $10bn merger of its Indian operations with local rival Zee Entertainment.

Sony’s confirmation on Monday that the deal, agreed three years ago, is a deathblow to the hopes of both firms of competing with streaming rivals such as Disney, Amazon and Netflix in India’s booming entertainment market of 1.4 billion people.

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The Japanese firm said in a statement that it had “issued a notice terminating the definitive [merger] agreements” by the two companies and that “closing conditions… were not satisfied”.

When agreed in 2021, the union was predicted by Zee chief executive Punit Goenka to be set to create an outfit worth close to $10bn, with annual revenues approaching $2bn.

However, closing the deal has been problematic, most recently because Sony reportedly did not want Goenka – who is facing a regulatory probe – to run the combined entity.

Sony had also become concerned about slumping profits at Zee since 2021, a source at the Japanese firm who declined to be named told the AFP news agency last week.

Big prize

India’s entertainment market, worth tens of billions of dollars, is already among the world’s biggest. Smartphone adoption is forecast to expand it further in the coming years.

The collapsed deal will leave Sony and Zee vulnerable at a time when Reliance (RIL) is negotiating a merger with Disney’s India unit, Bloomberg News reported.

Reliance is owned by Indian businessman Mukesh Ambani, the richest person in Asia.

Sony said in its statement that it had “engaged in discussions in good faith” to extend a deadline to close the deal but that the discussion period “has expired without an agreement”.

It added that it “does not anticipate any material impact on its consolidated financial results as a result” of the termination.

Source: News Agencies