Zee & Sony amicably settle disputes over their failed merger, to withdraw claims

NEW DELHI: ZEE Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India on Tuesday said they have settled their six-month-long dispute related to the failed USD 10-billion merger and have agreed to withdraw all claims against each other.

As part of the "comprehensive non-cash settlement" between ZEEL and Culver Max Entertainment Pvt Ltd (CMEPL), both "have mutually agreed to withdraw all respective claims against each other, in the ongoing arbitration at the SIAC and all related legal proceedings initiated in the NCLT and other forums," said a joint statement.

"The companies will also withdraw the respective Composite Schemes of Arrangement from the NCLT and inform the relevant regulatory authorities," it said.

Both ZEE and Sony had claimed a termination fee of USD 90 million (around Rs 748.7 crore) from each other for not complying to the Merger Cooperation agreement (MCA) signed in December 2021.

Sony had moved before the Singapore International Arbitration Center (SIAC) immediately two days after the termination of the deal, saying ZEEL did not satisfy the merger conditions, initiated arbitration proceedings and claimed a termination fee of USD 90 million.

This was contested by ZEEL before the SIAC, which denied any interim relief to the Sony group against the Indian broadcaster.

ZEEL also moved the National Company Law Tribunal (NCLT) seeking implementation of the proposed merger and later withdrew its plea.

Later in May, ZEEL terminated the MCA by issuing a letter dated May 23, 2024, and it also sought a termination fee of USD 90 million from two Sony Group entities -- Sony Pictures Networks India (SPNI), now known as Culver Max Entertainment, and Bangla Entertainment (BEPL).

Sony Pictures Networks India is the consumer-facing identity of CMEPL, a wholly-owned subsidiary of Sony Group Corporation, Japan.

Under the settlement terms, none of the parties will have any "outstanding or continuing obligations or liabilities" to the other, the joint statement said.

"The settlement stems from a mutual understanding between the companies to independently pursue future growth opportunities with a renewed purpose and focus on the evolving media & entertainment landscape, signifying the definitive conclusion of all disputes," it said.

In January this year, Sony had pulled out from the proposed USD 10.5-billion merger with ZEE Entertainment Enterprises Ltd citing failure to meet certain "closing conditions" by the Indian firm.

ZEEL and SPNI have agreed to merge on December 22, 2021.

The Mumbai bench of NCLT had on August 10, 2023, approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment and BEPL, which could have created a USD 10 billion media entity.

However, two years after that Sony Corporation announced the termination of the agreement on January 22, 2024.

After the termination of the deal, both companies are pursuing their independent course. ZEEL is facing financial hurdles, which it is trying to handle through several initiatives. It has reported a net profit of Rs 118 crore in the first quarter of this fiscal.