Sony blames Zee for not meeting conditions within the deadline and initiates arbitration proceedings seeking $90 million from Zee. The companies had entered into a merger agreement in December 2021 but could not complete the deal even after two years of negotiations.
What Happened?
Sony Pictures network media, which is now known as Culver Max Entertainment Pvt. Ltd., and its Indian entity Bangla Entertainment Pvt. Ltd. (BEEPL), called off the deal for the $10 billion merger with Zee Entertainment Enterprises Ltd. (ZEEL). Sony blamed ZEEL for not meeting closing conditions within the deadline. The Japanese company has also initiated arbitration proceedings against the Indian giant, seeking a fee of $90 million from ZEEL for the termination of the deal.
ZEEL has denied these allegations and is considering legal options to protect its interests.
Chain of Events
The entertainment giants had agreed to a merger with a vision to go bigger than Netflix in December 2021. However, multiple deadline extensions frustrated the Japanese giant, and after more than two years of negotiations, the closing conditions were unmet, causing a fallout between the companies.
After the announcement of calling off this merger, Sony said, ” We remain committed to growing our presence in this vibrant and fast-growing market and delivering world-class entertainment to Indian audiences.”
Zee Entertainment released a statement after receiving the communication of the call-off. It said, ” ZEE categorically denies all the assertions raised by Culver Max and BEPL on the alleged breaches under the terms of the merger cooperation agreement, including their claims for the termination fee.”
“The Board of Directors noted that ZEEL took all efforts and steps in line with the agreement, and we have held several deliberations and good faith negotiations with Culver Max”, ZEEL added.
A Race to Grab Attention in a Digital Age
Streaming platforms like Netflix, Amazon, and Hotstar are contending for a young digital audience in an increasingly profitable Indian market. Over the last few years, there has been a significant increase in competition among these platforms. The two companies have been present in India for a considerable amount of time and possess streaming services in the form of ZEE5 and SonyLIV. In addition, they have a substantial audience for their television channels, including Zee TV and Sony MAX.
If the deal falls apart, both parties will be negatively impacted. They had planned to expand their presence in the Indian market, which is currently experiencing a period of digital disruption. Moreover, there is a potential threat of increased competition if the Reliance-Disney deal goes through.
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