Failed Zee-Sony Merger Deal Cost The Former Rs 432 Crore: Report

The failed merger resulted in a loss of Rs 256 crore for Zee Entertainment in merger-related costs in FY24, while the costs incurred during FY23 stood at Rs 176 crore

Zee Entertainment reportedly suffered a major loss due to its failed merger with Sony Group’s Indian entity, Culver Max Entertainment. The media giant experienced a loss of Rs 432 crore due to merger-related costs in the 2022-23 (FY23) and 2023-24 (FY24) fiscal years as a result of the failed merger deal, media reports said.

During FY24, the company incurred merger-related costs of Rs 256 crore, while the expense during the preceding FY23 stood at Rs 176 crore, reported The Economic Times. Notably, the merger was called off earlier this year after concerns arose regarding the leadership of the proposed new entity. 

Additionally, the media group also suffered impairment charges worth Rs 331 crore in FY23 as a result of closure of some businesses, such as Margo Networks, the report noted. This in turn led to a reduction in the businesses’ valuations on the financial statements. 

The company recorded an effect of Rs 98 crore in FY23 on consolidated financial results. 

Notably, the deal, signed earlier in December 2021, received all regulatory approvals from the stock exchanges, the Competition Commission of India, and the National Company Law Tribunal. 

The media entity also suffered a liability worth Rs 32 crore due to fund closure costs in FY24. Notably, Zee also reduced its workforce by 15 per cent recently in order to implement an aggressive cost-cutting strategy. As part of the recent restructuring, the company logged an employee termination cost of Rs 22 crore, the report stated.

Background

The Zee-Sony merger deal proposed the creation of a new media entity worth $10 billion. The merger proposal was passed by Zee’s board unanimously in September 2021, and later was approved by the exchanges in July 2022.

However, Sony Group terminated the deal in January 2024 stating that the other party failed to satisfy ‘closing conditions’ after nearly two years of negotiations.