Japan’s Sony Group has sent a termination letter to Zee Entertainment to call off a $10 billion merger of their India operations following an impasse over who will lead the combined entity, Bloomberg News reported on Monday, citing sources.
Sony cited unmet conditions of the merger agreement as the reason for the termination in a letterĀ sent to Zee early on Monday, Bloomberg reported. The company is expected to disclose the letter to the exchange later, the report added.
Sony declined to comment, while Zee did not immediately respond to Reuters’ request for a comment.
The merger, announced more than two years ago, hit a stalemate over who will lead the combined company. Zee proposed CEO Punit Goenka, but Sony disagreed in light of a market regulator probe into Goenka.
The deal is perceived as crucial for the survival of the companies in a highly competitive market, given the impending merger between Disney’s Indian businesses and the media assets of billionaire Mukesh Ambani’s Reliance Industries.
Meanwhile, Zee is contending with declining advertising revenue and cash reserves in a market where global streaming giants such as Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) are also competing for a share.
Zee’s four-year pact with Disney’s Star for TV broadcasting rights of certain cricket events will also be at risk if the deal collapses, as Zee would have to pay $1.32 billion to $1.44 billion over the tenure of the agreement, analysts have said.
The broadcaster missed an early-January deadline to pay $200 million, Bloomberg News reported on Jan. 9.
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