TOKYO (AFP) – Sony was expected yesterday to make a final decision on a merger of its Indian unit with local rival Zee Entertainment, a source at the Japanese giant and press reports said.
The tie-up is aimed at helping both firms compete with streaming rivals like Disney, Amazon and Netflix in the vast and booming entertainment market of 1.4 billion people.
The merger was first agreed in 2021, with Zee chief executive officer (CEO) Punit Goenka saying that the new outfit would be worth close to USD10 billion with annual revenues approaching USD2 billion.
But closing the deal has been beset by problems, most recently because Sony reportedly does not want Goenka to run the combined entity.
Goenka has offered to step down after the merger takes place, The Economic Times daily reported, but is in favour of an “independent search process” to find a new CEO.
Sony, however, wants NP Singh, the CEO of its India unit, to replace him.
In addition, Sony has become concerned about slumping profits at Zee since 2021, a source at the Japanese firm who declined to be named told AFP.
The Economic Times reported earlier last week that Sony was also upset over not being kept in the loop over a USD1.5-billion cricket licensing agreement between Zee and Disney.
Sony’s board yesterday also had the option of extending a January 20 deadline to close the deal in order to allow for more negotiations.
A decision could be announced to the Tokyo stock exchange next week.
India’s entertainment market, worth tens of billions of dollars, is already one of the world’s biggest, while smartphone adoption is forecast to expand further in the coming years.
A collapsed deal will leave Sony and Zee more vulnerable at a time when billionaire Mukesh Ambani-led Reliance is negotiating a merger with Disney’s India unit, Bloomberg News reported.
