Sony Group Corp. has officially notified Zee Entertainment Enterprises Ltd. it plans to call off the merger between its India unit and the media network, ending a two-year acquisition saga and leaving Zee vulnerable to competition as rivals bulk up.

The Japanese entertainment giant sent a termination letter to Zee early on Monday and is expected to disclose it to the exchange later, said people familiar with the plan, who asked not to be identified as the announcement is not yet public.

Sony cited conditions of the merger agreement not being met as the reason for the termination, according to the letter seen by Bloomberg. 

A Sony spokeswoman declined to comment. A representative for Zee did not immediately respond to a request for comment. 

The move follows a stalemate between the companies over whether Zee’s Chief Executive Officer Punit Goenka would lead the merged entity amid an investigation into his conduct by India’s capital markets regulator. The standoff now appears to have scuttled the deal, which would have created a $10 billion media giant with the financial muscle to take on global powerhouses Netflix Inc. and Amazon.com Inc.

Bloomberg News reported on Jan. 8 that Sony was planning to call off the merger as the two sides fail to resolve the leadership dispute. Zee said later that they were still in talks to complete the merger.

If Goenka is ousted from Zee, which has seen deteriorating financial health, Sony can potentially reconsider another merger proposal, according to one of the people. Zee’s profit for the year ended March 31 dropped 95% to 478 million rupees ($5.8 million) compared with the previous period. 

Grace Period

The termination letter from Sony came after a 30-day grace period ended over the weekend when the two sides couldn’t reach an agreement on a deadline set in late December.

The last-lap tussle over leadership was the single biggest hurdle for the deal – Zee was insisting that Goenka would lead the new entity as agreed in the 2021 pact, while Sony was wary of his appointment given the regulatory probe against him.

The Securities and Exchange Board of India alleged in June that the Mumbai-based media house faked the recovery of loans to cover private financing deals by its founder, Subhash Chandra. Chandra and his son, Goenka, “abused their position” and siphoned off funds, SEBI said in an interim order, barring Goenka from executive or director appointments in listed companies.

While Goenka got a reprieve from an appellate authority against the Sebi order, Sony viewed the ongoing probe as a corporate governance issue, Bloomberg reported earlier. 

The collapsed deal, which had received almost all regulatory approvals, would have created an entertainment behemoth in which Sony was supposed to own a 50.86% stake, with Goenka’s family owning 3.99%. 

Sony, which will now have to redraw its media plans for the world’s most-populous country, was expected to benefit from Zee’s deep library of content in regional Indian languages and its bouquet of dozens of local television channels. 

Zee not only faces financial vulnerability and investor angst, it’s also going to compete against stronger rivals as Reliance Industries Ltd. and Walt Disney Co. plow on in their talks to merge their India media operations. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Prime Minister Narendra Modi today posted a video of him taking the steps to the Ram temple in Ayodhya. He carried offerings for Lord Ram as he walked slowly inside the temple.

“… It is my great pleasure to be a part of this divine programme,” PM Modi said in a post on X, formerly Twitter.

अयोध्या धाम में श्री राम लला की प्राण-प्रतिष्ठा का अलौकिक क्षण हर किसी को भाव-विभोर करने वाला है। इस दिव्य कार्यक्रम का हिस्सा बनना मेरा परम सौभाग्य है। जय सियाराम! https://t.co/GAuJXuB63A

— Narendra Modi (@narendramodi) January 22, 2024

The “pran pratistha” of Ram Lalla’s idol began at 12.20 pm and is expected to end by 1 pm.

PM Modi will then address a gathering which includes seers and prominent personalities.

Adorned with gold and flowers, the 51-inch Ram Lalla idol was revealed today shortly before the grand ‘pran pratistha’ ceremony at the Ayodhya temple today. Prime Minister Narendra Modi, who is leading the consecration ceremony, offered his prayers to the deity, flanked by several saints in the sanctum sanctorum of the temple. RSS chief Mohan Bhagwat was also present. 

The 51-inch idol, carved out of black stone by Mysuru-based artist Arun Yogiraj, had been covered with a veil in the days leading up to today’s ceremony.

The Ram Lalla idol on the ground floor of the new temple represents five-yea-old Ram. The first floor of the temple, which is yet to be built, will have the idol of Raja Ram, along with Sita, Laxman and Hanuman.

Earlier, a photograph of the idol that went viral on social media had sparked a row, with the chief priest of the temple demanding a probe into who circulated it. The photograph, the priest said, showed the eyes of the idol.

“The eyes of Lord Ram’s idol cannot be revealed before the ‘Pran Pratishtha’ is completed. If the eyes can be seen, an investigation should be done on who revealed the eyes and how the pictures of the idol went viral on social media,” chief priest Satyendra Das had said.

A galaxy of film stars, sportspersons, musicians, industrialists and other noted personalities have reached the holy town for the ground consecration ceremony. Over 11,000 invitations have been sent out to noted personalities. The Opposition has stayed away from the event. While some parties have accused the BJP of politicising the religious occasion, other Opposition leaders have said they would visit the temple later.