Did Sebi 'scuttle' Sony-Zee merger deal?

Days before Sony Group pulled the plug on the $10 billion deal, Zee group founder Subhash Chandra had written to Finance Minister Nirmala Sitharaman, blaming Sebi for trying to "scuttle" the merger of its flagship media firm Zee Entertainment Enterprise with the Japanese firm and subsequent investment in the merged entity.

Alleging market regulator Sebi is "acting with a predetermined mind", the Zee group patriarch requested the finance minister to take the necessary steps "to safeguard the interest of the minority shareholders of Zee".

Chandra in his letter dated January 16, seen by PTI, said Zee and all other people have been cooperating in the investigation related to the alleged fund diversion by promoters and expressed concern over a new notice issued by the market regulator to former directors of Zee.

"My concern is the timing of this new notice, and the urgency of the same since it matches with the merger completion timeline of Zee and Culver Max," he said.

The notice also does not contain any point which is not already a part of the company's records that have already been provided to Sebi, Chandra noted.

However, he also said: "I am not suggesting that Sebi should not investigate if they have doubts of any kind."

While referring to the order passed by the appellate tribunal SAT, where the order passed by the Securities and Exchange Board of India (Sebi) banning him and his son Puneet Goenka from holding key positions in any listed entity was challenged and was stayed, Chandra alleged the regulator for working with a prejudiced mind.

"I firmly believe that issuing a notice to the former directors of Zee at this stage, appears to be an exercise to sensationalise the matter through media platforms, I had expressed my concerns earlier as well, in a letter to Sebi in November 2018 over negative forces impacting the valuation of Zee," he said.

He further said: "If the mentioned parties continue to influence the investigations, especially by Sebi, it will lead to a huge financial loss for the minority shareholders of Zee."

As the founder of Zee, Chandra said several shareholders repeatedly requested him to help the company as its proposed merger with Culver Max Entertainment remains extremely important for all shareholders.

On Monday, Sony Group Corp, the Japanese parent company of Sony Picture Network India (SPNI) and Bangla Entertainment Pvt Ltd (BEPL) announced the termination of the $10 billion merger agreement with Zee, while seeking $90 million for breach of conditions besides initiating arbitration.

Sony Group Corporation (SGC) had said Zee did not satisfy the merger conditions despite engaging in discussions to extend the end date for consummation of the transaction.

Zee has over 50 channels operating in 11 language clusters, having a weekly viewership base of 572 million in the domestic market along with an OTT platform Zee5.

Culver Max Entertainment -- an indirect wholly-owned subsidiary of Sony Group Corporation, Japan -- owns 26 channels, operating in Hindi and several other languages, having a viewership of over 700 million.

Besides, it has also one OTT platform Sony LIV on which it streams live sports, movies, short films and its original and archival content.

It has around 33 million viewers.

As per the agreement, Sony had plans to invest $1.575 billion in the merged entity and have a majority stake of 52.93 per cent.

If the Sony-Zee merger was completed, then the combined entity would have owned over 70 TV channels, two video streaming services (Zee5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.