Zee Entertainment incurred Rs 432 crore ($52 million) in merger-related costs during financial years 2023-24 and 2022-23 due to its failed merger deal with Sony Corp’s Indian media unit, Culver Max Entertainment, per The Economic Times.
The Indian media conglomerate’s merger-related costs were Rs 256 crore ($30.7m) in 2023-24 and Rs 176 crore ($21m) in the previous year.
The merger agreement with Culver Max Entertainment was terminated on January 22 due to disagreements over leadership and unmet closing conditions as claimed by Sony.
Signed in December 2021, the merger deal had received all key clearances from stock exchanges, the Competition Commission of India, and the National Company Law Tribunal.
As part of portfolio rationalisation and meeting merger conditions, ZEE incurred impairment charges of Rs 331 crore in 2022-23 due to the closure of certain businesses, including Margo Networks, ET reported. This means that the value of the businesses was reduced on ZEE’s financial statements to reflect their diminished worth or operational discontinuation.
The company stated that the impact on consolidated results was Rs 98 crore in 2022-23, as losses from these entities had been recorded in earlier financial results.
Costs, claims & arbitration
Additionally, the company estimated a liability of Rs 32 crore to fund closure costs in 2023-24. ZEE Entertainment, which slashed its workforce by 15 per cent as part of aggressive cost-cutting measures, also recorded an employee termination cost of Rs 22 crore in a recent restructuring.
Regarding arbitration cases filed by Culver Max Entertainment and Star India, ZEE claims there would be no material adverse impact as both cases were untenable.
Culver Max Entertainment has approached the Singapore International Arbitration Centre, seeking $90m in termination fees from ZEE over alleged violations of the merger agreement.
Similarly, Star India has moved the London Court of International Arbitration, seeking directions for ZEE to either implement the International Cricket Council (ICC) TV rights agreement or provide compensation for damages suffered.
