Zee Entertainment incurred Rs 432 crore in costs from failed Sony merger

Zee Entertainment faced Rs 432 crore in costs due to its failed merger with Sony's Indian media unit, Culver Max Entertainment, during the financial years 2023-24 and 2022-23, according to The Economic Times. The costs were Rs 256 crore in 2023-24 and Rs 176 crore in 2022-23. The merger, signed in December 2021, was terminated on January 22 due to disagreements over leadership and unmet conditions.

Despite receiving approvals from stock exchanges, the Competition Commission of India, and the National Company Law Tribunal, the merger did not go through. Zee incurred impairment charges of Rs 331 crore in 2022-23 due to the closure of businesses like Margo Networks, reflecting their reduced value. The impact on consolidated results was Rs 98 crore in 2022-23, as earlier losses had been recorded.

Zee also estimated a liability of Rs 32 crore for closure costs in 2023-24 and recorded Rs 22 crore in employee termination costs after cutting its workforce by 15%. The company claimed that arbitration cases filed by Culver Max Entertainment and Star India would not have a material adverse impact.

Culver Max Entertainment approached the Singapore International Arbitration Centre, seeking $90 million in termination fees from Zee over alleged merger agreement violations. Similarly, Star India went to the London Court of International Arbitration, seeking enforcement of the ICC TV rights agreement or compensation for damages.