Zee-Sony deal: What's lies next for Subhash Chandra and Punit Goenka after SAT order?

In December 2021, Zee Entertainment Enterprises Limited (ZEEL) announced a mega merger with Culver Max Entertainment (Sony Pictures Networks India). The merged entity would have a formidable 75 channels, two OTT (over the top) platforms and two studios, plus a strong presence across genres and regions. Punit Goenka, ZEEL’s MD & CEO, is slated to head it.

But it faced a setback this June, when an interim order from the Securities and Exchange Board of India (Sebi) barred Subhash Chandra, Essel Group’s Chairman, and his son Goenka from holding key managerial positions in ZEEL or any other listed firm. It accused them of having diverted money to private entities. On October 29, the Securities Appellate Tribunal (SAT) set aside the order, giving Chandra and Goenka a shot in the arm.

The question now is what this means for Sebi. According to Ashish Kumar Singh, Managing Partner of Capstone Legal, the final order will be passed after the investigation concludes. “It will have to explain the transactions that are alleged to be suspicious, and in case no wrongdoing is found, Sebi can dismiss the complaints and take no action.”

Meanwhile, last month, Culver Max Entertainment acknowledged that the merger was delayed. “Although the transaction was previously expected to close by the end of the first half of the fiscal year ending on March 31, 2024, based on the latest progress, it is currently expected to close in the months ahead,” it said. Should the merger go through, the promoters of Zee will hold 4 per cent in the merged entity. Reports suggest that Sony may look for alternatives to Goenka to helm the new entity.

Rahul Goel, Partner at AnantLaw, says, “The order allows Sebi to complete the investigation, including the said transactions, and proceed in accordance with law,” he says.

@krishnagopalan