Sony calls off merger with Zee, demands $90 million termination fee
New Delhi, Jan 22: Sony Group Corp on Monday said it is calling off a USD 10 billion merger of its India unit with Zee Entertainment, following a stalemate over who will lead the merged entity.
The entertainment giant sent a termination notice to Zee on the deal, which was announced more than two years back, and is seeking USD 90 million as break-up fees for violating the terms of the merger pact and "invoking arbitration".
In a stock exchange filing on the issue, Zee on its part denied all claims made by Sony and said it is exploring legal remedies. "Zee has displayed utmost commitment towards the merger by undertaking several permanent and irreversible steps, resulting in one time and recurring costs for Zee," it said.
A standoff over leadership is said to be the reason for the deal being called off. Sony had resisted demand by Zee chief executive Punit Goenka, who was investigated by market regulator SEBI over fraud allegations, to stay on after the merger.
The deal was seen as crucial for both companies for survival in the world's fastest-growing large economy.
The deal would have created an entertainment conglomerate with more than 70 Indian TV channels, popular Bollywood studios and an extensive film library to take on global powerhouses Netflix and Amazon.
"Sony Pictures Networks India Pvt Ltd (now known as Culver Max Entertainment Limited), a wholly-owned subsidiary of Sony Group Corporation, today issued a notice terminating the definitive agreements entered into by SPNI and Zee Entertainment Enterprises Ltd. relating to the merger of ZEEL with and into SPNI, which was previously announced on December 22, 2021," the Japanese firm said in a statement.
The definitive agreements provided for the merger to close within 24 months. On expiry of such a period, the deadline was extended by a month.
"The merger did not close by the end date as, among other things, the closing conditions to the merger were not satisfied by then, " the filing said.
Sony said it was "extremely disappointed that the conditions to the merger were not satisfied" by the deadline, which had been set as January 21. The company added that it "remained committed to growing our presence" in India.
In a stock exchange filing, Zee said it had also received a demand from Sony for a USD 90 million termination fee over "alleged breaches" of the terms of the deal.
"The company categorically denies all claims and assertions" by Sony and is evaluating all options, Zee said in the filing adding it "will take all the necessary steps to protect the long-term interests of all its stakeholders, including by taking appropriate legal action".
Zee said it had taken "all efforts and steps" in line with the merger agreement and had consistently worked towards implementation of the deal.
The Indian firm had seen a decline in financial performance with profits declining due to rising streaming costs and falling advertising revenue. Zee's four-year agreement with Disney's Star for TV broadcasting rights for certain cricket events may be at risk after the deal collapses as it has to pay USD 1.32-1.44 billion over the tenure of the pact.
Sony-Zee deal, which won approval from regulators in August, would have created a USD 10 billion entertainment behemoth in which Sony was supposed to own a 50.86 per cent stake, with Goenka's family owning 3.99 per cent.
The collapse of the deal will now send Zee to redraw its strategy to compete against such a giant as the possible merger of media operations of Reliance Industries Ltd and Walt Disney Co.
Sony too will have to relook at its India strategy as it no longer will benefit from Zee's deep library of content in regional languages and its bouquet of dozens of television channels.
The merger, which would have created a USD 10-billion entity had already received regulatory approvals from NCLT, fair trade regulator CCI, bourses NSE and BSE, shareholders and creditors of the company.
However, an interim order by Sebi barring Essel Group chairman Subhash Chandra and Goenka from holding the position of a director in any listed company after market regulator found them diverting funds from the company, changed the game.
Though the Sebi order was stayed by the Securities Appellate Tribunal, Sony is not comfortable with Goenka leading the merged entity during the probe due to the stringent corporate governance policy in Japan.
The combined entity would have owned over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.
Sony had plans to invest USD 1.575 billion in the merged entity and have majority stake. Chandra family was also free to increase its shareholding from the current about 4 per cent to up to 20 per cent.
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Actress sexual assault: Court says Prosecution 'miserably' failed to prove conspiracy against Dileep
Kochi (PTI): The prosecution had "miserably" failed to prove the conspiracy charge against Dileep in the sensational 2017 actress sexual assault case, a local court has observed while citing inconsistencies and lack of sufficient evidence against the Malayalam star.
The full judgement of Ernakulam District and Principal Sessions Court Judge Honey M Varghese was released late on Friday, and has revealed the judge also pointing out at unsustainable arguments put forth by the prosecution.
"The prosecution miserably failed to prove the conspiracy between accused No.1 (Pulsar Suni) and accused No.8 (Dileep) in executing the offence against the victim," the court held.
It examined in detail, the prosecution's allegation that Dileep had hired the prime accused to sexually assault the survivor and record visuals, including close-up footage of a gold ring she was wearing, to establish her identity.
On page 1130 of the judgment, under paragraph 703, the court framed the issue as whether the prosecution's contention that NS Sunil (Pulsar Suni) recorded visuals of the gold ring worn by the victim at the time of the occurrence, so as to clearly disclose her identity, was sustainable.
The prosecution contended Dileep and Suni had planned the recording so that the actress' identity would be unmistakable, with the video of the gold ring intended to convince Dileep that the visuals were genuine.
However, the court noted that this contention was not stated in the first charge sheet and was introduced only in the second one.
As part of this claim, a gold ring was seized after the victim produced it before the police.
The court observed that multiple statements of the victim were recorded from February 18, 2017, following the incident, and that she first raised allegations against Dileep only on June 3, 2017.
Even on that day, nothing was mentioned about filming of the ring as claimed by the prosecution, the court said.
The prosecution failed to explain why the victim did not disclose this fact at the earliest available opportunities.
It further noted that although the victim had viewed the sexual assault visuals twice, she did not mention any specific recording of the gold ring on those occasions, which remained unexplained.
The court also examined the approvers' statements.
One approver told the magistrate that Dileep had instructed Pulsar Suni to record the victim's wedding ring.
The court observed that no such wedding ring was available with her at that time.
During the trial, the approver changed his version, the court said.
The Special Public Prosecutor put a leading question to the approver on whether Dileep had instructed the recording of the ring, after which he deposed that the instruction was to record it to prove the victim's identity.
The court observed that the approver changed his account to corroborate the victim's evidence.
When the same question was put to another approver, he repeated the claim during the trial but admitted he had never stated this fact before the investigating officer.
The court noted that the second approver even went to the extent of claiming Dileep had instructed the execution of the crime as the victim's engagement was over.
This showed that the evidence of the second approver regarding the shooting of the ring was untrue, as her engagement had taken place after the crime.
The court further observed that the visuals themselves clearly revealed the victim's identity and that there was no need to capture images of the ring to establish identity.
In paragraph 887, the court examined the alleged motive behind the crime and noted that in the first charge sheet, the prosecution had claimed that accused persons 1 to 6 had kidnapped the victim with the common intention of capturing nude visuals to extort money by threatening to circulate them and there was no mention about Dileep's role in it.
The court also rejected the prosecution's claim that the accused had been planning the assault on Dileep's instructions since 2013, noting that the allegation was not supported by reliable evidence.
It similarly ruled out the claim that Suni attempted to sexually assault the victim in Goa in January 2017, stating that witness statements showed no such misconduct when he served as the driver of the vehicle used by the actress there.
The court also discussed various controversies that followed Dileep's arrest and the evidence relied upon by the prosecution, ultimately finding that the case had not been proved.
Pronouning its verdict on the sensational case on December 8, the court acquitted Dileep and three others.
Later, the court sentenced six accused, including the prime accused Suni, to 20 years' rigorous imprisonment.
The assault on the multilingual actress, after the accused allegedly forced their way into her car and held it under their control for two hours on February 17, 2017, had shocked Kerala.
Pulsar Suni sexually assaulted the actress and video recorded the act with the help of the other convicted persons in the moving car.
