Zee-Sony Merger Gets NCLT Approval, Analysts Give Thumbs Up

The merger between Zee Entertainment Enterprises (ZEEL) and Sony Pictures Network India (now called Culver Max Entertainment) has received approval from the National Company Law Tribunal (NCLT).

This is a major step forward for the merger, which is expected to create the second-largest entertainment network in India after Disney Star.

Analysts and industry trackers are positive about the merger, citing the combined entity's strong presence in varied genres such as entertainment and sports, and in the regional markets. The merged entity will have 75 channels, two OTT platforms and two studios.

The NCLT's approval is a major shot in the arm for Zee, which has been struggling financially in recent years. The merger is expected to help Zee to reduce its debt and improve its financial performance.

However, there are still some challenges ahead for the merged entity. The Sebi (Securities and Exchange Board of India) has issued an interim order against ZEEL's founder Subhash Chandra and his son, Punit Goenka, the company's MD & CEO. The order bars them from holding directorships in listed entities. This could impact the management of the merged entity.

Overall, the NCLT's approval is a positive step for the Zee-Sony merger. The merger is expected to create a stronger and more competitive entertainment network in India.

NCLT Clears the Path for Zee-Sony Merger

The recent green light from the National Company Law Tribunal (NCLT) for the merger of Zee Entertainment Enterprises (ZEEL) and Sony Pictures Network India (now Culver Max Entertainment) has garnered positive reactions from analysts and industry observers.

This merger is expected to create a formidable entity, boasting an extensive portfolio of 75 channels, two OTT platforms, two studios, and a robust presence in entertainment, sports, and regional markets. As a result, the merged entity is poised to become the second-largest entertainment network, following Disney Star.

Resounding Approval and Dismissal of Objections

Emkay Global, in a recently released note, described NCLT's approval of the merger as a significant boost for Zee. The approval also serves to dismiss any related objections. It's noteworthy that the merger has already secured approvals from stock exchanges and the Competition Commission of India.

However, an interim order from the Securities and Exchange Board of India (SEBI) on June 12, alleging misuse of funds by ZEEL's founder Subhash Chandra and MD & CEO Punit Goenka, has created some uncertainty. Goenka is poised to take on the role of MD & CEO in the merged Zee-Sony entity. Emkay's report acknowledges this ongoing issue but believes that it's unlikely to derail the merger.

Background and Merger Details

Zee and Sony entered a definitive agreement at the end of 2021 to merge their television networks, digital assets, product operations, and program libraries. In the post-merger structure, Sony's shareholders will hold 50.86% of the combined entity, while Zee's promoters will possess 3.99%, and ZEEL's shareholders will retain the remaining 45.15%.

The Path Ahead for the Merger

While the NCLT approval marks a significant milestone, a few steps remain for the merger process. A filing with the Registrar of Companies will occur within 30 days of receiving the NCLT order, followed by a vetting by the Ministry of Information and Broadcasting (MIB).

Subsequently, the stock will undergo delisting for approximately six weeks. Ashish Kumar Singh, Managing Partner at Capstone Legal, affirmed that the NCLT's decision supports the likely progression of the merger.

He clarified that the SEBI interim order is a separate matter that concerns Zee's promoters and might not impact the merger process.

Some relevant and latest facts about the Zee-Sony merger:

• The merger was first announced in December 2021.

• The NCLT approval is a major step forward for the merger and is expected to be completed in the coming months.

• The merged entity will be the second-largest entertainment network in India after Disney Star.

• The combined entity will have 75 channels, two OTT platforms and two studios.

• The merger is expected to help Zee to reduce its debt and improve its financial performance.

• The Sebi order against ZEEL's founder Subhash Chandra and his son, Punit Goenka, could impact the management of the merged entity.

• However, analysts are positive about the merger and believe that it will create a stronger and more competitive entertainment network in India.

Here are some additional facts that are relevant to the news article:

• The Zee-Sony merger is the latest in a series of mergers and acquisitions in the Indian media and entertainment industry.

• The industry is consolidating as players look to scale up and compete with global giants like Netflix and Amazon Prime Video.

• The merger is also a sign of the growing strength of the Indian media and entertainment industry.

• The industry is expected to grow at a CAGR of 12% over the next five years.

• This growth is being driven by factors such as the rise of digital media, the increasing popularity of regional content, and the growing disposable income of Indians.