As the D-Day looms on January 20, until when both Zee and Sony have committed to continuing merger talks, industry speculation is rife about whether the union will come to fruition or unravel. Industry sources, however, suggest that the negotiation process may see one more extension of deadline.

Themerger,announced in September 2021, if it goes through, will create a Rs 14,851-crore (FY23 revenues) firm. The merged entity will be India’s fourth-largest media company after Google, Meta and Disney-Star.

In the last two years, the merger went through manylegal and regulatory hurdles,but now, with most clearances in place, it is believed to be stuck on who will lead it. If industry veterans are to be believed, the two parties are working on a solution to conclude the merger on a positive note.

In its initial stages, the merger hadPunit Goenkaslated to lead the joint entity as the CEO. However, in June 2023, the Securities Exchange Board of India (SEBI) dropped a bombshell, barring Goenka and Zee Group Chairman Subhash Chandra from holding key management positions in any listed entity, including fourZee group companies. To Goenka’s relief, this decision was overturned three months later in October 2023 by the Securities Appellate Tribunal (SAT).

Nonetheless, the matter escalated into a point of contention, withSonynow advocating for its leader to spearhead the merger. According to industry insiders, Zee, until recently, was equally adamant about leading the merger. Sources hinted that most of the termination rumours were perhaps a tool to put pressure on ZEE to succumb to Sony’s demands.

However, for now, sources close to the developments suggest that both parties are exploring a middle ground to resolve the leadership dispute.

Two prevailing narratives hint at a potential middle ground for closing the deal. One suggests that Zee might leverage the situation to seek a higher valuation, demanding additional funds in exchange for reconsidering its decision to exclude Goenka from heading the merger. The alternative narrative suggests a potential consensus on appointing a neutral third party as the CEO, a decision jointly agreed upon by Zee and Sony.

Industry experts, meanwhile, weigh in on the merger, emphasizing its benefits for both parties. One expert noted, "A merger is in favour of both parties. Zee is struggling with funds, and Sony needs to scale up and consolidate to survive in the Indian market. They are surely burning their heads to close a deal."

However, not everyone shares this optimism. Another industry veteran believes that while the merger is favourable for both, Sony, being a global company, may pull out due to concerns about merging with a company entangled in numerous legal matters. "It is a great merger option. Almost perfect. But knowing Japanese thinking, they may call it off because of aversion to regulatory hassles," suggests another veteran.

According to one view, for this merger to be complete, legally, there can’t be any other CEO of the company but Goenka, as the same was one of the key conditions of the merger.

While Zee-Sony merger talks began almost two years ago, 2024 started with speculation that the deal might be called off, with reports suggesting that Sony was preparing to send a termination notice to Zee. The deal was to be finalised by December 2023. Media outlets have even explored legal options available to both companies in the event of a terminated deal.

Responding to these reports, Zee Entertainment Enterprises Limited clarified on Tuesday that the news about the termination of the multi-dollar merger before January 20 is baseless and factually incorrect.