The termination of the merger deal by Sony (Culver Max Entertainment) was “premature” as ZEEL was engaged in good faith negotiations with them, said R Gopalan, Chairman of the Board of Directors of Zee Entertainment Enterprises Ltd (ZEEL) on Monday asserting that the prolonged and intense merger-related activities impacted the operations of the company.

During an investor conference call held on Monday evening, Gopalan also reiterated that the ZEE Board and management were fully committed towards the Zee Sony merger and said that the company will fiercely defend itself in the appropriate forums

“On merger failure with Sony, we reiterate that ZEE board and management were fully committed to the completion of the merger by undertaking some permanent and irreversible steps. The Board also had discussions with Sony during the process.

“Under the aegis of the Board, ZEEL management was engaged with Sony in good faith discussions to conclude the merger. The MD (Punit Goenka) was also agreeable to step down in the interest of the merger.  However, in its communication dated 22 Jan 2024, Sony unilaterally terminated the merger co-operation agreement and initiated legal procedures. This move by Sony was premature as ZEEL was engaged in good faith negotiations and was taking the required steps in the course of the integration journey over the last two years to ensure that the scheme was implemented at the earliest,” Gopalan said during the investors’ call.

He further said that Sony's assertion of the closing conditions of the merger not being satisfied by ZEEL, “is not an accurate or holistic reflection of reality.”

“We will make counterclaims against Culver Max and BEPL for breaches of the merger agreement at the appropriate stage. The Board is focused on ensuring the highest standards of corporate governance, compliances and process controls,” he said.

Talking about the trajectory of ZEEL, he said that since 2020, the performance has been impacted due to industry-wide macro slowdown, transitory issues and management bandwidth constraints due to the merger activities.

“Primarily three issues which impacted the performance are COVID and related disruption, and a slowdown in ad spends; and in the last few years there have been intense and prolonged merger-related activities which have taken time, energy and share of management bandwidth impacting operational business,” he said.

He said that the Board thinks that ZEEL management has execution capability and this has consistently enabled ZEE to deliver great performance till 2019.

“This management got the Sony deal to the table which was a great deal for the shareholders.  We are fully cognisant that there is room for performance enhancement and we are putting through a revival plan by ZEEL and this is already being put into action to accelerate growth and enhance profitability.

“We believe that we will be on a much stronger footing financially in these few quarters and we are committed to the performance of the revival plan. The Board of Directors have decided to closely monitor the business model and plan presented by the MD/CEO of the company,” Gopalan said.

The Chairman of the Board also said that due to several speculations and the negative public opinion of the company, the Board of Directors of the company has constituted an independent investigation committee headed by Dr Satish Chandra, retired judge of Allahabad High Court with Uttam Agarwal and P V Ramana Murthy, both independent Directors of the company, as members of the committee.

“This committee will submit its report to the Board and suggest necessary action. Additionally, the company will continue to vigorously defend itself in appropriate legal forums against any factually incorrect assertion,” he said.

Regarding the ongoing SEBI investigations in the alleged funds diversion matter, Gopalan said that ZEE and the Board have extended complete cooperation but the “company is not aware of any order where SEBI has recorded any findings as yet.”