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The Bankruptcy Court in Mumbai recently dismissed an application filed by Phantom Studios India (PSIPL) that sought to implement the merger scheme between Zee Entertainment Enterprises Limited (ZEEL) and Sony Group companies, Bangla Entertainment Private (BEPL) and Culver Max Entertainment (CMEPL).

PSIPL, formerly known as Mad Man Film Ventures, held approximately 1.3 million shares of Zee Entertainment, valued at around ₹50 crore, at the time of its tribunal filing. Last month, the tribunal officially revoked its approval for the proposed $10 billion merger between ZEEL and Sony's Indian media units, CMEPL and BEPL.

"During the course of the hearing, we were informed that PSIPL attended the shareholder meeting and voted in favor of the scheme. As Section V, Paragraph 10 allows withdrawal by parties, PSIPL cannot insist on the scheme’s implementation," stated the division bench, consisting of Judicial Member Lakshmi Gurung and Technical Member Charanjeet Singh Gulati, in its October 24 order.

The companies also argued that the tribunal lacked the authority to enforce a scheme that had not taken effect and noted that the scheme's approval was conditional.

In August, ZEEL and Sony's Indian units reached a non-cash settlement to resolve all disputes stemming from their failed merger. Both companies agreed to withdraw claims in the ongoing arbitration at the Singapore International Arbitration Centre and related proceedings in the NCLT.

This settlement, focused on independently pursuing future growth, followed Sony’s January termination of the merger, citing ZEEL's unmet closing conditions and leadership disagreements. Sony subsequently filed a $90 million arbitration claim against ZEEL.

Mumbai Court dismisses Phantom Studios’ bid to enforce Zee-Sony merger scheme

The Independent Investigation Committee (IIC), constituted by the Board of Directors of ZEE Entertainment Enterprises Ltd. (ZEE), has cleared the company of allegations raised by market regulator SEBI regarding the alleged siphoning of funds amounting to Rs 2,000 crore. The IIC report was submitted to the company’s Board on Wednesday.

ZEE formed the IIC on February 27, chaired by Justice Dr. Satish Chandra, a former judge of the Honorable High Court of Allahabad. The committee also included ZEE’s two Independent Directors: Mr. Uttam Prakash Agarwal, Chairman of the Audit Committee and former President of the Institute of Chartered Accountants of India, and Dr. P.V. Ramana Murthy, Chairman of the Nomination and Remuneration Committee, a lawyer, author, and academic expert in HR and organizational development with over 30 years of experience across renowned global brands.

Dr. Satish Chandra, Chairman of ZEE’s Independent Investigation Committee and Former Judge of the Allahabad High Court, stated, “We have invested a significant amount of time and energy to conduct a detailed review of all the allegations, and the necessary submissions have been made to the Board. The required records and information were obtained from the Company, its management, and promoters over the last few months, which were duly verified by the Committee, along with a team of experts from the financial domain.”

Chandra further added, “The efforts of Committee members, Dr. Murthy and Mr. Agarwal, along with the external advisors, allowed us to conduct a comprehensive evaluation of all the points. The Committee acknowledges the support provided by the management, which enabled us to complete the review in a timely manner. Based on our report, we have not found anything adverse or improper in the Company’s operations, and a detailed report has been submitted to the Board outlining our findings.”

The committee stated in its report that it reviewed the allegations raised by the regulatory agencies and verified all the documents and information provided by ZEE during the investigations conducted by SEBI. The committee also sought advice from reputable external audit firms (empaneled with regulatory agencies), as well as taxation and regulatory experts, to ensure a comprehensive review of all points.

The committee’s report indicates that ZEE has implemented necessary remedial measures for past issues already reviewed by SEBI. The Committee also noted that the transactions under investigation did not adversely impact the Company or its shareholders. These transactions were found to be part of the normal course of business, and no material irregularities were identified.

The Committee found no need for further corrective or disciplinary measures, policy changes, or legal steps.

Following the submission of its findings, the Board has advised the Company to proactively settle any pending adjudication proceedings with SEBI in a timely manner, in the interest of shareholders and all stakeholders of the Company.

Investigation committee gives clean chit to ZEE, submits report to the board

On Tuesday, Zee Entertainment Enterprises Ltd. informed Securities and Exchange Board of India (SEBI) that they have launched a Foreign Currency Convertible Bonds (FCCB) and raised $239 million. Proceeds from the FCCBs will be drawn in tranches and these bonds will be divided into 10 series.

In its filing, ZEEL informed SEBI that considering the receipt of remittance of USD 23900000 from Resonance Opportunities Fund, St. John’s Wood Fund Limited and Ebisu Global Opportunities Fund (‘Investors’) towards subscription of 5% coupon, unsecured, unlisted, foreign currency convertible bonds of USD 1000 each maturing in 10 years (“FCCBs”), the Securities Issue and Allotment Committee of the Company has, inter-alia, considered and approved the allotment of FCCBs on a private placement basis to Investors.

In rupee terms, the total fund raised amounts to Rs 1,997 crore. The company's board had approved raising funds up to Rs 2,000 crore on June 6 via various methods, including the issue of equity shares.

Zee Entertainment had said it has plans to invest these funds to enhance strategic flexibility to pursue growth opportunities in the evolving media landscape.


ZEEL raises $239 million through 10-year Foreign Currency Convertible Bonds

Disney-owned Star India terminated its alliance agreement with Zee Entertainment for the $1.5 billion International Cricket Council (ICC) TV rights on June 20, according to a regulatory filing by Zee.

However, the broadcaster has decided to seek damages during the arbitration proceedings, which have not yet been quantified. Star initiated arbitration proceedings against Zee before the London Court of International Arbitration (LCIA) on March 14.

On Wednesday, Zee stated that Star India terminated the agreement on June 20, citing a breach of contract. The original agreement, signed on August 26, 2022, had positioned Zee as a key player in broadcasting major ICC events, including the ICC Men’s T20 World Cups and the ICC Men’s Cricket World Cup.

“During the previous year, Star had sent letters to Zee alleging breach of the Alliance Agreement due to non-payment of dues for the rights fee's first instalment, aggregating to $203.56 million, along with the payment for bank guarantee commission and deposit interest aggregating Rs 17 crore, and financial commitments, including furnishing of corporate guarantee/confirmation as stated in the agreement,” Zee said in its disclosure.

“Based on legal advice, the management believes that Star has not acted in accordance with the Alliance Agreement and has failed to obtain necessary approvals and execute the required documentation and agreements," the company added.

The now-terminated deal would have granted Zee exclusive television rights to major ICC men’s events, including two ICC Men’s T20 World Cups (2024, 2026), the ICC Men’s Champions Trophy (2025), the ICC Men’s Cricket World Cup (2027), and key ICC U-19 events.


Star India terminates $1.5 billion worth ICC sub-licensing deal with Zee

Zee Entertainment Enterprises Limited (ZEEL) received shareholders’ nod to raise Rs 2,000 crore via the issuance of securities, the company informed via a filing to the exchanges on Monday, July 15. Out of the total votes cast, 78.83% were in favour of the resolution while 21.16% were against it.

The announcement was made after the market hours and the stock ended at Rs 160.34 on the NSE on Monday, up by Rs 4.84 or 3.11% over the closing price on Friday. “The remote e-voting process concluded today i.e., Monday, July 15, 2024, at 5:00 p.m. (IST),post which the Scrutinizer appointed for scrutiny of Postal Ballot process, Ms. Vinita Nair (Membership No. F10559), Senior Partner, M/s. Vinod Kothari & Co., Company Secretaries, has submitted her report on the results of the Postal Ballot. Based on the report of the Scrutinizer, we hereby inform you that the shareholders of the Company have duly passed the resolution for issuance of securities for an amount not exceeding Rs 2,000 crore with requisite majority,” Zee said in a regulatory filing.

ZEEL plans to invest these funds to enhance strategic flexibility to pursue growth opportunities in the evolving media landscape. The funds will be raised by issuance of equity shares and or/any other eligible securities. 

On July 11, Zee Entertainment had informed the bourses that its board of directors will meet on July 16 to discuss fundraising options. These options include private placements, Qualified Institutional Placements (QIP), and preferential issues. 

The announcement outlined plans for issuing securities in multiple tranches to enhance the company’s strategic flexibility and support future growth opportunities in the media industry. The disclosure followed the board’s previous decision on June 6 to approve raising funds amounting to Rs 2,000 crore, crucial for enhancing strategic options and seizing growth prospects.


ZEEL receives shareholder nod to raise Rs 2000 crore via issuance of securities

Zee Entertainment Enterprises Ltd. (ZEE), has announced its partnership with Nasscom for its recently-launched Generative AI Foundry programme, that aims to foster innovation and growth in the start-up ecosystem. Through the strategic partnership, ZEE’s Technology and Innovation Centre will primarily focus on enabling and supporting co-piloted generative AI solutions for India’s media and entertainment ecosystem.
 
In a collaborative effort, Nasscom and ZEE’s Technology and Innovation Centre organised a one-day workshop to identify areas of mutual interest and explore synergies for potential partnerships. As part of the workshop, ZEE hosted 14 startups from the nasscom Generative AI Foundry programme at the ZEE Technology & Innovation Hub in Bengaluru. 


Nitin Mittal, President – Technology & Data, ZEE, said “We are delighted to embark upon this exciting journey in collaboration with nasscom, aiming to shape the future of India’s AI community. The synergy between our endeavours, Nasscom’s commitment to nurturing tech startups, and ZEE's leadership in media innovation signifies more than just a convergence of minds—it represents a fusion of futuristic visions poised to define the industry's next chapter.”



Ankit Bose, Head of Nasscom AI, said “The partnership between both organisations is a significant one for the Generative AI startups. It is heartening to witness excellent initiatives from the industry to collaborate with these startups. The innovative solutions possess the potential to transform various sectors including M&E.”
 
Nasscom’s Generative AI Foundry programme is aimed at nurturing technology startups in the AI domain to elevate India's standing in the global Generative AI startup landscape. In a significant stride towards this mission, the programme, in collaboration with over 30 industry organizations and investors, selected 26 promising startups last month. These startups will receive comprehensive support, including mentorship, access to resources, funding, and industry connections, to propel their products to the next level.
 


Zee and Nasscom partner to support Generative AI startups


On Wednesday, the National Company Law Appellate Tribunal (NCLAT) postponed the hearing regarding IDBI Bank's appeal against Zee Entertainment Enterprises regarding the initiation of insolvency proceedings. The next hearing is now slated for November 8.

IDBI Bank aims to recover approximately Rs 150 crore in unpaid dues from Zee. 

NCLT had issued a notice to Zee, recognizing the significance of the case, and instructed both parties to submit their responses and rejoinders.

IDBI Bank challenged NCLT’s Mumbai bench’s decision May 19, which rejected its plea to commence insolvency proceedings

NCLAT defers hearing on IDBI Bank's plea against Zee

The Securities Appellate Tribunal (SAT) on Wednesday reserved its order in applications filed by Subhash Chandra and his son Punit Goenka to challenge SEBI (Securities and Exchange Board of India)’s confirmatory order that that prohibited them from holding any directorship or key managerial positions in listed entities. A date for the order has been given out yet.

During the hearing, senior counsel Abhishek Manu Singhvi, representing Punit Goenka, put forth a series of defenses. He contended that this stage of the proceedings involves allegations and investigations, emphasizing the need for a preventive rather than punitive approach in the public interest.

He pointed out that 8 months is too long a period to wait for and argued that the situation called for a balanced response rather than draconian measures, with a focus on preventive punishment for future compliance rather than penalizing past actions.

Additionally, he requested that the CFO of the merged company be allowed to report directly to the board if necessary, suggesting measures to safeguard shareholder interests.

Singhvi stressed the legitimacy and benefits of all transactions in question, asserting that the prosecution was unwarranted.

He highlighted Goenka's lack of control over other Essel Group companies and the absence of any demonstrated loss caused to the company. Singhvi also pointed out that there had been no recurrence of the matters previously investigated by SEBI in 2019 over the last four years, and failure to set aside the order could have significant repercussions.

 

SAT reserves order in appeal filed by Punit Goenka against SEBI’s confirmatory order

The Securities Appellate Tribunal (SAT) is scheduled to hear Zee CEO Punit Goenka's appeal regarding SEBI's (Securities and Exchange Board of India) confirmatory order today. This date was established during the previous hearing on September 14.

During the September 14 hearing, SAT had sought clarification regarding the basis for SEBI's imposition of an 8-month deadline for completing the investigation in this case. The tribunal had also questioned whether SEBI could realistically meet this specified timeline without requiring extensions.

“The matter is listed today before SAT for rejoinder arguments to be advanced on behalf of Puneet Goenka as SEBI concluded its arguments in the matter on 14.09.2023. If the rejoinder arguments on behalf of Punit Goenka are concluded today, SAT is likely to reserve its judgment in the matter. Given there is no interim stay on the operation and effect of SEBI's confirmatory order dated 14.08.2023,’ explained Pradyuman Dubey, Partner, DSK Legal. 

On August 14, shortly after the NCLT (National Company Law Tribunal) approved the Zee-Sony merger, SEBI issued an order barring Zee promoters Punit Goenka and Subhash Chandra from taking on significant management positions within Zee companies or the newly merged entity with Sony. SEBI's investigation into the matter as per the order is expected to be conducted within 8 months.

“Goenka is likely to look forward to the SAT judgment being delivered expeditiously. The best outcome for Goenka would be if SAT overturns SEBI’s confirmatory order otherwise the restraint imposed by that order will continue to be applicable on him for the time being,” Dubey said. 



SAT hearing on Punit Goenka's appeal against SEBI confirmatory today

In a rare development, arch rivals in the broadcast industry -- Zee Entertainment Enterprises (Zee) and Disney Star – have forged a strategic licensing agreement this week.

As per the agreement, Disney Star will license the TV broadcasting rights of the International Cricket Council (ICC) Men’s and under-19 global events for a four-year period to Zee for an undisclosed amount. Disney Star will continue to have exclusive digital rights for its digital platform (Disney+ Hotstar). Zee will make staggered annual payments from CY24 onwards.

Disney Star had won the rights to telecast the ICC tournaments till 2027 for $3 billion after a closed-loop bid process last week.

That deal included both digital and television rights for men's and women's ICC tournaments. It was a big plus for Disney Star, which had lost the digital rights of the Indian Premier League (IPL) for the 2023-27 cycle to Viacom18 in June.

The agreement with Disney Star enables Zee to be the exclusive television rights holder of ICC men’s events, including the coveted ICC Men’s T20 World Cup (2024, 2026), ICC Men’s Champions Trophy (2025), and the ICC Men’s Cricket World Cup (2027), along with key ICC U-19 events.

What do they gain?

Industry analysts believe this deal will help Zee to up its sports content, attracting more ad and channel subscriptions. Disney Star will mitigate its concentration risk in one market when it comes to TV rights and continue to ride the digital wave.

Sandeep Goyal, managing director, Rediffusion, believes that it almost seems like a pre-mediated deal.

“The understanding could not have been reached overnight. In a way, it’s good for both. Disney Star can now concentrate on the selling of IPL, while Zee can put its fullest might behind the ICC offering. The arrangement is a bit unusual but cooperation is the new norm across industries,” he notes.

The deal comes in at an opportune time for Zee as it awaits the merger with Sony.

Will it generate profits?

“If they (Zee) didn’t have this deal, they would have lost an opportunity to own any major India cricket event rights till 2027,” says Naval Seth, Deputy Head of Research at Emkay Global Financial Services. Seth’s analysis says the expensive value of rights such as these often do not end up bringing in any profit.



<blockquote>“The understanding could not have been reached overnight. In a way, it’s good for both. Disney Star can now concentrate on the selling of IPL, while Zee can put its fullest might behind the ICC offering. The arrangement is a bit unusual but cooperation is the new norm across industries,” says Sandeep Goyal</blockquote>



“The prices for these rights (IPL and ICC India cricket events) have gone through the roof and recovering them would become increasingly difficult for the networks. That explains why Star, which has been dominating the India cricket broadcast space, decided to sell part of its rights,” Seth says.

Brilliant and functional move

Some experts are calling it a brilliant and functional move.

Ramsai Panchapakesan, senior-vice president and national head, integrated media buying at Zenith, says four large networks control the complete live sports (cricket) telecast space and each of them have traditionally been very protective about their rights.

But things are changing. The splitting of IPL rights between two large networks has set a new way of scaling up revenue opportunity as the audience pool will get added, when it comes to more than one network.

This has set an optimistic precedent and only goes to show how recovering the sheer volume of money that is invested in these rights becomes a Herculean task for a single network alone, he said.

“The spread is now larger,” notes Panchapakesan. The Zee-Star deal, according to him, has been further strengthened in terms of exercising the might of big media houses to interplay on their own merits.

Why Zee Network?

Panchapakesan breaks it down.

According to him, among the top four networks, Zee is the only 100 percent Indian broadcasting company with deep roots in the markets. Zee is now the single-largest network after it announced a merger with Sony. This deal only widens the horizons for amplifying reach.

As for Zee, this is a scale-up, Panchapakesan says. “Zee is a pioneer in entertainment and regional content, and, in the recent past, marque live cricket events were the missing piece. GEC can fetch limited vertical growth and there is a need to go for horizontal expansion to grow revenue. Hence, no wonder this alignment is highly strategic and it’s a first-of-its-kind partnership in the Indian media and entertainment landscape,” he says.



<blockquote>“The prices for these rights (IPL and ICC India cricket events) have gone through the roof and recovering them would become increasingly difficult for the networks. That explains why Star, which has been dominating the India cricket broadcast space, decided to sell part of its rights,” says Naval Seth</blockquote>



More collaborations on the anvil

Vinay Hegde, chief buying officer, Madison Media, says that the Star-Zee strategic alliance to telecast all ICC Men’s events for 2024-27 is the first-of-its- kind in India. It is similar to how Sky Sports and BT Sports collaborate to broadcast the Premier League.

"For Star, this could also be to ensure the recovery of their huge investments, including IPL and 2024-27 ICC events, and balance their books. For Zee, which has in the past made some unsuccessful forays into sports, this gives an opportunity to also try and establish themselves as the destination for cricket and maybe more. It’s another avenue to monetise, considering cricket is a religion in India, and will have its dedicated viewers," he adds.

For the viewers, this will now mean adding Zee channels to their bouquet (in addition to Star, Sony, Viacom18), making the viewing pool wider for cricket buffs and might have a positive impact on subscription packages.

"Considering investments in acquiring sports broadcast and streaming rights is increasing, this deal could open the doors for more such strategic collaborations in the future to widen the net, enabling better monetisation to recover the investments," Hegde concludes.

Disney Star had retained the television rights of IPL for Rs 23,575 crore, whereas the digital rights were picked up by Viacom18 for Rs 20,500 crore.

Back to merger: About the Zee-Sony deal

A merger between the Indian unit of Japan's Sony and Zee Entertainment to create a $10 billion TV enterprise will potentially hurt competition by having "unparalleled bargaining power", the Competition Commission of India's (CCI) found in an initial review, according to a report by Reuters.

The country's antitrust watchdog on August 3 sent notice to the two companies stating the watchdog is of the view that a further investigation is merited. The CCI's findings are likely to delay regulatory approval of the deal and could force the companies to propose changes to its structure as well.

Sony and Zee in December 2021 decided to merge their television channels, film assets and streaming platforms to create a powerhouse in a key media and entertainment growth market of 1.4 billion people, challenging rivals like Walt Disney Co.