NCLT gives the nod for Zee Entertainment and Sony Merger
The National Company Law Tribunal (NCLT) has given its nod to the merger of Zee Entertainment Enterprises, a leading Indian entertainment company, with Culver Max Entertainment, formerly Sony Pictures Networks India.
A bench that included Justice HV Subba Rao and member Madhu Sinha announced the decision on Thursday.
Following the announcement on Thursday, Zee Entertainment Enterprises Ltd’s shares surged by 20%, reaching a new 52-week high of Rs 290.50.
This merger consolidates both media giants’ digital assets, linear networks, production operations, and program libraries. According to the merger’s arrangement, Sony Group will indirectly hold a 50.86% stake in the combined entity.
In contrast, ZEE’s founder will own about 4%, with the remaining shares distributed among ZEE’s shareholders. Additionally, Sony Group has committed to paying ₹1,100 crore to the Essel Group promoters as a ‘non-compete’ fee.
It is also noted that Sony has also provided a capital commitment to Zee, amounting to $1.575 billion or Rs 11,000 crore, aimed at enhancing their investments in premium content, particularly in sports.
However, the journey to this approval could have been smoother. Several creditors, including Axis Finance, JC Flowers Asset Reconstruction Co, IDBI Bank, Imax Corp, and IDBI Trusteeship, raised objections, especially against the non-compete clause in the merger scheme.
In defending this merger, Zee stated that it had already secured approvals from major financial institutions and regulators such as the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), the Competition Commission of India (CCI), and the Securities and Exchange Board of India (SEBI).
Yet, NSE and BSE had reservations due to an order from the Securities Appellate Tribunal (SAT) against Zee Entertainment’s top executives.
Previously, the SAT supported SEBI’s interim order that restricted Essel Group Chairman Subhash Chandra and Zee Entertainment’s CEO, Punit Goenka, from holding significant positions in listed companies.
Despite these challenges, ZEE argued that opposing the merger, valued at over ₹1,200 crore, was akin to having the company hostage.
After thorough consideration, the NCLT dismissed all objections, paving the way for the merger of these two media powerhouses. With this approval, the integration process between the companies is expected to commence soon. ZEE will have a month to register with the registrar of companies. Following this, the company’s shares will be delisted, and the merged entity will be re-listed within six weeks.
While the merger’s completion date remains uncertain, experts predict mid-November could finalise it. Meanwhile, all eyes are on SEBI’s upcoming decision regarding Goenka’s role as the CEO of the merged company, expected on August 14. Goenka remains optimistic, emphasising that the merger’s success is his top priority, regardless of his position in the new entity.
An Anecdote of Zee TV’s Cricket Broadcast Ambitions
A recent article published by CricBuzz covered the journey of Zee’s ambitious efforts to secure the rights for ICC events.
In June 2000, the International Cricket Council (ICC) made a pivotal decision. They rejected Zee TV’s bid of over $600 million for media rights, opting for the Global Cricket Corporation’s (GCC) $550 million offer.
The primary reason for this choice was Zee’s absence of a bank guarantee clause. Ehsan Mani, at the helm of the ICC finance committee at the time, emphasised the monumental potential of ICC TV rights, marking this as a significant turning point.
Despite Zee TV’s consistent enthusiasm to invest in cricket rights, they faced numerous setbacks. The Board of Control for Cricket in India (BCCI) even went to the extent of blacklisting Zee following the launch of the unofficial Indian Cricket League (ICL). However, the tides might be turning for Zee.
The recent approval of their merger with Sony by the National Company Law Tribunal (NCLT) is poised to open new doors, granting them the opportunity to broadcast mainstream cricket.
This merger is anticipated to affect the cricket broadcasting landscape. The upcoming BCCI media rights auction on August 31 is expected to witness heightened competition, with the combined force of
Zee and Sony emerged as formidable contenders against Disney Star and Viacom 18.
In a turn of events, the Zee/Sony collaboration will start broadcasting the ICC matches in 2024. This development is particularly noteworthy for Zee, who faced obstacles in the past when vying for ICC rights.
With over nine years of diverse professional experience, Ragul has made significant contributions across various domains, including Media Operations, OTT Technologies, Video Production, Ecommerce, and Social Media.
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