Zee considering criminal case against Sony
January 30, 2024
By Chris Forrester
The fallout from the collapsed $10 billion merger between Zee Entertainment and Sony’s India broadcasting interests (Bangla Entertainment) continues to have serious ramifications.
Both sides have said that litigation will commence, and Sony already has an arbitration claim filed in Singapore claiming $90 million of what it alleges are contractual obligations from Zee.
However, Subhash Chandra, the veteran founder of the Zee media empire, and who is now Chairman Emeritus at Zee, is accusing Sony of intentionally scuttling the merger, and is threatening criminal action against Sony.
In an interview with India’s Business Today, Chandra says Zee met all the terms laid out in the deal but that it was Sony’s “strategy all along to engage with Zee and eventually withdraw, portraying Zee as vulnerable”. He added: “I can prove it was Sony’s criminal design to start the merger process and then withdraw.”
The deal started to unravel last year when various Indian regulators, including the powerful Securities & Exchange Board of India (SEBI), stated that Chandra and his son Punit Goenka had abused their positions at Zee and appropriated funds “for their own benefit”. It led to Goenka being barred from being a director of any quoted business while the investigation was live.
Chandra insists that all payments under investigation had been repaid in full.
Zee wanted Goenka to be CEO/MD of the merged business. Sony disagreed and wanted their own CEO appointed (NP Singh).
Chandra said he was confident of Zee bouncing back, saying: “In 1998-99, an analyst predicted that Zee wouldn’t survive in this competitive environment…we not only survived, but also thrived”.
Meanwhile, Zee’s smaller investors, including pension funds and private shareholders have asked Zee’s board of directors for more detail on the background of the merger collapse.
There is also talk from Chandra that he wants to increase his family’s ownership stake in Zee, initially to 5 per cent and then to a total of 26 per cent.