Sony has informed in Japan and Zee in India that their deal has been called off.What may have been the reason for this though? It's possible thatZee wanted to safeguard itself from the Reliance takeover bid and for that reason, they may have sent out an olive branch to Sony. Over time the complexities developed in their case and no one knew where this issue was heading.

Time and again Punit Goenka, who holds just four percent equity in Zee, tried to hamper the merger. This was a failure of corporate governance, maybe, where they could not remove Goenka from the board of members in the beginning itself.

Zee may have wanted to do this merger in the beginning but during the process, they may have realised that the merger shouldn't be done or be given to some other entity because of mainly two probable reasons. Firstly, the bank accounts of Zee may have so many financial complexities that it seemed tough to hand over the business to someone else. The second reason could be that till the time Zee was handling the throne all was hunky-dory, but when another party would come to share the throne, who knows how many skeletons in the cupboard would be exposed.

Even though the merger stands dead today, there is another angle to the story that is unfolding here. Zee spent around 200-300 crore on the merger and just a few hours before the deadline of the merger, the announcement was made that this merger is being called off. The stock market will react violently to this scenario.

One thing is for sure now, Zee at this level of infrastructure, network and reach, would not survive on its own. They will have to look for another buyer, which most probably could be NDTV which was bought by the Adani Group a few months back.The route for NDTV is clear. If they buy Zee they will benefit in the General Entertainment category since they have no exposure in that genre and there exist many gaps. Hence, this would be a perfect fit.

Nowhere has it happened in the history of India that a deal did not go through, even after NCLT’s approval. This is a unique case which also entails lengthy legal work.

Zee’s case is a classic example of how low ROI business eats itself up over time. When Subhash Chandra began news broadcasting in 1991, Zee was the pioneer in the market. From back then, Zee Entertainment had a successful run till 2023. But, they moved to unrelated activities during their journey by investing in infrastructure, toothpaste and more. When a low-ROI business tries to diversify itself into unnecessary businesses, the outcome isn’t very favourable.

The story hasn’t ended here. It will definitely come back!

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