Introduction
Mergers and acquisitions are not just about business deals; they are about control, trust and timing. One of the biggest example this notion was the much anticipated Zee-Sony merger which was set to create a USD 10 Billion media powerhouse.¹ When the deal was announced in 2021, it was about to change the face of the Indian Entertainment Industry. Zee’s long-standing dominance in Indian market combining with Sony’s global strength sounded like a perfect match. But in January 2024, Sony refused the Merger, citing unfulfilled conditions and management disputes.
This business story gives us an understanding of corporate governance, regulatory delays and how Leadership and managerial disputes act as a barrier even in the most promising deals.
How the Deal was Structured In December 2021
Zee Entertainment Enterprise Limited (ZEEL) and Sony Pictures Networks India (SPNI), officially signed a merger agreement.¹ The basic plan was to create a giant that would compete with OTT platforms like Netflix India and Amazon Prime. The proposed terms of the agreement were: –
- Sony would have held the majority of stakes around 50.86%, while ZEE stakeholders would control about 47% of the new entity.
- Punit Geonka Zee’s CEO was to become CEO and take up the role of Managing Director.
- The combined network would have over 70 TV channels, including Zee5 and SonyLiv.
A Quick Timeline of the Deal
In September 2021, Zee Entertainment Enterprises Ltd. and Sony Pictures Network India agreed to come into a merger and form India’s largest conglomerate. By December 2021, both the companies signed a tentative agreement. The Competition Commission of India (CCI), after studying the Merger’s impact on India’s market competition, approved the deal in October 2022.² The National Company Law Tribunal (NCLT) also gave its acceptance to the merger deal.² However, the alliance began to break in late 2023, and its main reason was a dispute over leadership roles and governance control.
According to the terms of the agreement, Punit Goeka, Zee’s CEO was to become the CEO of the merged entity, but Sony raised concerns about this move following the investigations by Securities and Exchange Board of India (SEBI) that highlighted the financial irregularities at Zee.³ After multiple talks and negotiations, Sony officially terminated the Merger in January 2024, attributing to breaches of Merger’s agreement.³ So, the Merger which could be well-cherished, broke down due to regulatory complexities and corporate governance.
Why Did The Merger Fall Apart?
1. Question on Leadership
As Zee wanted Punit Geonka to be the CEO of the merged entity, Sony, however, had reservations. Around that time, SEBI investigated the Zee promoters for alleged corporate mismanagement and fund diversion.³ This for Sony, having a CEO under investing was a red flag. Since, no multinational company wants uncertainty at the top, Sony decided to call-off the Merger.
2. The Role of Regulators
The Merger went through a series of regulatory hurdles before it could have become a reality. The Competition Commission of India (CCI) verified that whether this Merger could create the monopoly and reduce competition in the market. The Securities and Exchange Board of India (SEBI) highlighted the Zee’s mismanagement and fund divergence by promoters.³ Finally, the approval from the National Company Law Tribunal (NCLT) was required under Sections 230-232 of the Companies Act, 2013.³
The process of approvals took nearly a time of 2 year’s, by that time the trust between the companies and market conditions changed. This long delay can create challenge even for the corporate giants and can serve as a reminder of how complex the Indian Regulatory Service can be. Moreover, SEBI’s investigations highlighted the ZEE’s malpractice about corporate management created uncertainty among Sony and ZEE.
3.Contractual Clauses and Conditions Precedent
Every Merger Agreement contains:
- Conditions Precedent i.e. CP’s, which demonstrates about the deals which must be fulfilled before closing the deal.
- Material Adverse Effects i.e. (MAE) clauses, which gave a company exit if something serious happens to the other company’s finances or management. The main aim of these clauses is to protect the parties from the unforeseen risk’s and providing a priviledge if something serious happens, they can end the deal overnight. ZEE failed to meet some of it’s closing conditions.⁴
4.Promoter Control and Governance Culture
ZEE, since it is formed, has been a promoter-driven company. The Subhash Chandra family,even with a relatively small shareholding, has played a significant role in decision making. On the other hand, for Sony, which is a professionally managed company, this created a discomfort.⁵ So, the clash of cultures- Promoter-Driven v. Professionally Managed created a sense of conflicts between the two organization and this also raises a question; how much control should be given to promoters after bringing foreign investments.⁵
Corporate And Legal Takeaways:
A. Drafting or Making Deals
The ZEE-Sony Merger shows us the need why lawyers spend months for a drafting the merger agreements. The wording of CP’s, MAE Clauses and leadership covenants directly creates an impact on whether the deal would survive or not. The need for precised drafts is not just about formality, it is about protection.⁶
B. Governance is Non-Negotiable
Good Leadership is the most determinable factor for the regulators. SEBI’s investigations highlighting ZEE’s corporate mismanagement and fund divergence by promoters weakened the investors confidence and gave Sony enough grounds to back out.⁶
C. Regulatory Speed Matters
The complex nature of India’s Regulatory Systems can hurt commercial momentum. The delays shown by the NCLT, SEBI and CCI in approval stage, reflect the need for a more-efficient time-bound clearance system as it would ensure a legal certainty among the parties.⁷
D. Promoter v. Professional Management
In India, there is still a need to find a correct balance between the family-led entrepreneurship and and institutional governance. The Zee-Sony merger tells us that while promoters bring vision, investors demand a suitable structure for the profit, and balancing these interests in cross-border mergers is crucial.⁷
Lesson for Law Students
For the students studying corporate law, the Zee-Sony merger shows the importance of Sections 230-232 of the Companies Act, 2013 , showing their actual process and challenges faced by mergers in India. It also shown us the role played by CP’s, MAE Clauses in a business deal, showing the students why good drafting skills are important for avoiding ambiguity. This case also highlights the role regulatory bodies like SEBI, CCI and NCLT plays in shaping the outcome of major corporate deals. They not only just approve or reject transactions, they influence how the business will function, survive and maintain integrity in the market.⁸ Ultimately, the aim of this case study is to highlight that corporate law is not just about memorising the sections or provisions. It is about having a complete understanding and knowledge about how deals shaped, negotiated and sometimes even destroyed and role played by business in constantly shaping the law.⁸
Conclusion
The Zee-Sony merger which was once envisioned as a transformative ventures in the India’s entertainment industry now became a lesson in how regulatory complexities, governance issues and communication breakdowns can disrupt even the most promising venture.
For government and policymakers, it encourages the need for a faster and coordinated regulatory process, which encourages a merger, rather than becoming a challenge for it.
For corporations, it highlighted the need for transparent management and that sound Leadership is as important as monetary profit.
For law students, it teaches us that behind every corporate deal lies a balance of law, strategy and human judgment.⁹
In the end, the Zee-Sony merger is not just about a failed merger; it is a source reflecting the corporate governance of India, where every dispute, delay and decision becomes a lesson for future lawyers and law students.¹⁰
Footnotes
1. Zee Entertainment Enterprises Ltd, ‘Press Release on Merger Agreement with Sony Pictures Networks India’ (Dec 2021) https://www.zeeentertainment.com accessed (18 Oct 2025).
2. Reuters, ‘Sony terminates $10 billion merger with Zee Entertainment’ (22 Jan 2024) https://www.reuters.com accessed (18 Oct 2025).
3. SEBI, ‘Investigation and Regulatory Reports on Zee’ (2023) https://www.sebi.gov.in accessed (19 Oct 2025).
4. Zee Entertainment Enterprises Ltd, ‘Merger Agreement Clauses’ (Dec 2021) https://www.zeeentertainment.com accessed (20 Oct 2025).
5. Business Standard, ‘Promoter-Driven Culture and Professional Management Clash’ (Feb 2024) https://www.business-standard.com accessed (20 Oct 2025).
6. Ramaiya, Guide to the Companies Act, 19th edn, LexisNexis 2022.
7. NCLT and CCI Reports on Zee–Sony Merger (2022–2023) https://www.nclt.gov.in, https://www.cci.gov.in accessed (21 Oct 2025).
8. Corporate Law Journal, ‘Lessons from Zee–Sony Merger’ (2024) https://www.clj.in accessed (21 Oct 2025).
9. Business Line, ‘Impact of Failed Mergers in India’ (Jan 2024) https://www.thehindubusinessline.com accessed (22 Oct 2025).
10. Indian Corporate Governance Review, ‘Zee–Sony Merger Case Study’ (2024) https://www.icgr.in accessed (22 Oct 2025).
Author Name- Tushar Soni, 1st Year BBA-LLB(H), Himachal Pradesh National Law University, Shimla
