Exploring the Sony-Zee Merger: A Comprehensive Analysis

[By Jose S Jose]

The author is a student of The National University of Advanced Legal Studies (NUALS), Kochi.



In a significant stride within the entertainment industry, NCLT (National Company Law Tribunal) Mumbai recently granted approval for the merger of Zee Entertainment Enterprises and Culver Max Entertainment, previously known as Sony Pictures Networks India. This transformative green light not only ushers in the possibility of a formidable entertainment giant commanding about 26% of India’s entertainment market but also beckons the amalgamation of rich content portfolios and industry expertise.

However, beneath this promising surface, a series of legal challenges have cast shadows over the merger’s realization, resulting in protracted delays. In this comprehensive analysis, we’ll first explore the intricacies of the Corporate Insolvency Resolution Process (CIRP) proceedings against Zee by NCLT Delhi and the subsequent SEBI (Securities and Exchange Board of India) ban on Punit Goenka, Managing Director of Zee, which have collectively contributed to this prolonged period of uncertainty.

Beyond legal matters, we’ll discuss the background of the merger, the strategic agreement between Sony and Zee, and the potential benefits for shareholders and consumers. We’ll also navigate the legal hurdles and strategic intricacies of the Sony-Zee Entertainment merger, ultimately shedding light on the promising future it holds for India’s entertainment landscape.


While industry analysts speculate that the merger could potentially materialize within the next 2 to 3 months, the  timeline remains subject to various factors, introducing an element of uncertainty. In the dynamic landscape of mergers and acquisitions, anticipation is met with caution. The seeds of this partnership were sown back in 2021 when both entertainment juggernauts, Sony and Zee, forged an agreement to pool their expertise, digital assets, and extensive networks. With this ambitious alignment, a new chapter in the entertainment industry seems inevitable.

Under the terms of this strategic agreement, the Sony group stands poised to claim a controlling stake of approximately 51% in the nascent entity. Meanwhile, the founders of Zee are set to retain a notable 4% share. The remaining equity will be thoughtfully allocated among the existing shareholders of Zee, allowing for a diversified ownership structure reflective of the company’s roots.

This merger is a juncture of strategic relevance, offering manifold advantages for the new conglomerate. By synergizing their strengths, these companies aim to fortify their competitive edge in the market. Beyond boardrooms, shareholders too are poised to reap the rewards, as the merger is anticipated to translate into an augmented value of shares. At the same time, consumers are expected to be the ultimate beneficiaries, as the amalgamation promises an enhanced content palette, catering to an ever-evolving appetite for diverse entertainment experiences. This significant milestone is currently hindered by the legal obstacles that have raised significant concerns.



A significant turning point emerged when IndusInd Bank set in motion the process for Corporate Insolvency Resolution Proceedings (CIRP) against Zee Entertainment. The initial salvo was fired with an application filed at the NCLT Mumbai, invoking Section 7 of the Insolvency and Bankruptcy Code (IBC), complemented by Rule 4 of the Insolvency & Bankruptcy (Application to Adjudication Authority) Rules, 2016. Section 7 of the IBC confers the authority upon financial creditors to initiate the corporate insolvency resolution process against a corporate debtor before the NCLT. Meanwhile, Rule 4 of the Application to Adjudication Authority Rules outlines the procedural compass for filing such an application.

In this legal overture, IndusInd Bank set its sights on resolving a financial debt that scaled beyond 90 crores—a threshold that bore implications for both Zee Entertainment and the proposed merger. The filing of this application injected a notable pause into the rhythm of the merger’s progression, casting a shadow of uncertainty over its timeline.

The unfolding narrative took a series of twists as the legal pendulum swung back and forth. The order initiating the insolvency process issued by the NCLT Mumbai, which carried the resonance of a significant pronouncement, encountered an intermission when it was effectively stayed by an order from the NCLAT Delhi. However, the tide shifted once more as the same judicial forum, the NCLAT Delhi, ultimately terminated the CIRP order. The restoration of movement was prompted by a pivotal development—namely, the emergence of a settlement between the two principal entities involved: Zee Entertainment and IndusInd Bank. Remarkably, the settlement between the two has streamlined the process of merger.


Empowered by the SEBI Act of 1992, the Securities and Exchange Board of India (SEBI) stands as a consequential statutory body entrusted with safeguarding investor interests and fostering the growth of India’s securities market. In a sweeping move, SEBI wielded its regulatory authority to impose bans on two significant figures within the Essel Group—the Chairman, Subhash Chandra, and Zee’s CEO, Punit Goenka. This decisive action was catalyzed by compelling evidence that illuminated a troubling pattern: both individuals had allegedly misappropriated funds through a misuse of their directorial positions.

The reverberations of SEBI’s stance echoed beyond its initial pronouncement. This interim ban, effectuated with resolute intent, was upheld by the Securities Appellate Tribunal (SAT). This affirmation cemented the gravity of the allegations and the necessity of the actions undertaken.

The consequences rippled across the corporate landscape, throwing into question the identity of the future director of the envisaged merged entity—a role previously slated for Zee’s incumbent CEO, Punit Goenka. This unforeseen hurdle cast a shadow over the merger’s strategic blueprint, inducing fluctuations in market sentiment. The tangible ramifications extended to Zee’s stock price, experiencing a noteworthy reduction. Mandated by SEBI, a probe has been set in motion with the express aim of unravelling the intricate threads that have woven this complex narrative. The investigation’s scope, ambitiously encompassing an 8-month timeline, serves as a testament to the gravity of the situation and the meticulous inquiry required.


While the ink on the merger agreement between these two entities was penned and announced back in 2021, the long-awaited union remains in a state of suspended animation due to the legal hurdles delineated earlier. Yet, with the recent development of the CIRP proceedings being set aside by the NCLAT and the NCLT’s resounding approval of the merger, a promising chapter seems to unfold for both these corporate entities.

As the turbulence of legal impediments begins to subside, the horizon appears notably clearer for these companies. A sense of optimism envelopes the situation, amplified by the fact that the merger’s finalization inches closer. If all unfolds as anticipated, this corporate marriage is poised to reach its culmination by the close of the current fiscal year—namely, by the end of March 31st, 2024. This impending landmark is in no small part attributed to the pivotal NCLT ruling, which has paved an unequivocal path forward for this transformative fusion.

An application for the merger was formally lodged under the aegis of Sections 230-232 of the Companies Act 2013. These crucial provisions are dedicated to facilitating the judicial sanctioning of compromises or arrangements tied to mergers, amalgamations, or divisions—a process overseen by the tribunal. The tribunal, in this context, wields the authority to summon a stakeholders’ meeting and extend invitations for objections.

This merger encountered a variety of objections from a range of creditors, including prominent entities such as Axis Finance Ltd. and IDBI Trusteeship Services Ltd. . Among these stakeholders, a palpable concern emerged—a concern that echoed in various quarters. The statute stipulated that an objector must assert a stake holding that accounts for 10% or more of the company’s shares or, in the case of creditors, must be owed 5% or more of the total outstanding debt. In the specific context at hand, this criterion wasn’t met.

Notably, the tribunal discerned a particular facet—the objecting creditors, while substantial in number, did not directly extend credit to Zee. Instead, their financial claims were woven into the intricate tapestry of the Essel Group’s various entities, of which Zee is just a pivotal part.

With these insights in mind, the tribunal, with its impartial gavel, dismissed all objections, upholding the rationale that the objectors did not fulfill the statutory qualifications necessary to warrant their objections. Consequently, the green light was bestowed upon the merger, cementing the tribunal’s approval as a vital step in the unfolding narrative.


It is worth noting that the resolute calculations of the NCLT indicated that the resultant entity, post-merger, would command an estimated valuation of around 44,000 crores. In the unfolding narrative of the Sony-Zee merger, ambition and legal intricacies have woven a captivating tale. The green light from NCLT Mumbai signaled the potential of a transformative entertainment colossus. Despite the challenges posed by CIRP proceedings and SEBI’s interventions, the resolve of both entities has endured, paving the way for a brighter chapter. This experience highlights the need for companies to maintain a careful equilibrium between expansion and adherence to regulatory requirements. . As the curtain rises on the merger’s realization, the fusion of creativity, expertise, and corporate responsibility offers a promising landscape. The narrative exemplifies the industry’s resilience in surmounting hurdles, promising an era of innovation and shared success in the dynamic landscape of Indian entertainment.


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