After Sony’s merger plan for India’s turns into farce, time to walk

By Andy Mukherjee

Sony Group Corp. thought it had a strong script to appeal to audiences in the world’s most populous country, but a merger that would make it the leader of the television entertainment market in India was doomed from the start. By following it for nearly two years, the Japanese company has become an unwitting actor in a farce. He should cut his losses and walk.


India’s Securities and Exchange Board last week alleged that Entertainment Enterprises Ltd, a Mumbai-based media company it wants to unite with, had falsified loan recovery of its founder Subhash Chandra’s private entities. The institute said he and his son Bonit Goenka stole the money “for their own benefit”, which barred them from holding executive or management positions in listed companies. Chandra and Goenka, CEO of, appealed on the grounds that the regulator had not heard their view of the story. SEBI doubled down by providing a 197-page response.

The legal drama creates a new problem for Sony. Even though he was supposed to take control of the larger empire, and inject an additional $1.4 billion in cash, Goenka had to run the show. This is how Chandra, the 72-year-old Indian media mogul, orchestrated his 2021 deal to retain some influence over, India’s oldest non-state TV network.

Chandra reached this unfortunate pass because of his erroneous leveraged bets in unrelated industries like infrastructure, a mistake he admitted to in early 2019. But a plan to pay off the debt by selling half of the family stake in to a strategic partner fell through. Starting. Two years later, a major American investor began a campaign to remove his son as director. At the time, Sony, which competes with in offering similar Bollywood-style entertainment and sports fare, was kind to its rival’s rescue. Not only was Sony agreeing to let Goenka continue as CEO, but it was also giving the family the option to increase their near-depleted stake to 20% and throw in additional shares as a non-compete fee.

The TV market in India is big, but its best days are in the rearview mirror. So even though Network reaches 750 million people, or six times the population of Japan, each week, its 16.6% market share remains stagnant. The most promising horse in the stable is ZEE5, the streaming service. It has 114 million monthly active users, and posted a 35% jump in sales in the fiscal year that ended in March. However, the company’s overall revenue did not grow. With programming and advertising costs stagnating, Ebitda collapsed 38%.

So much has changed in India in the last couple of years that Sony still wants a merger on the same terms – or wants it at all.

Last June, Viacom18 Media Pvt. Inc., a joint venture between Mukesh Ambani’s Reliance Industries Ltd and Paramount Global, has raised $2.7 billion to win an exclusive five-year live broadcast deal for Indian Premier League cricket matches. Ambani decided to offer this year’s tournament for free, and then went on to sign an agreement with Warner Bros Discovery Inc. To stream the latter’s exclusive content in India, including the popular series, Khilafah. Petrochemical heavyweight Ambani Group, which focuses on consumer businesses such as telecom, retail, digital content and e-commerce, has already become a massive media player.

If the deal with Sony falls through, will regret not selling it to Ambani so soon before Sony’s cobbled bailout. At the time, Atlanta-based Invesco Development Markets Fund was trying to use its 18% stake in to convince CEO Goenka to discuss a potential deal with Reliance. Those talks went nowhere as a complete exit for the Chandra family would have been an almost certain outcome – Ambani and Manoj Modi, his advisor, weren’t as generous to father and son as it turned out Sonny was.

Investors have already lost their enthusiasm. shares are down 50% from their highs after the merger was announced in September 2021. If the Japanese side defaults on the deal now, creditors are likely to make new attempts to drag the Indian media house into bankruptcy. Although last month the insolvency court rejected one such application, the interim order issued by SEBI has changed the landscape. Sony is getting nowhere by waiting for regulators’ claims to make the rounds in the Securities Court of Appeal and possibly the Supreme Court of India.

The troubled company had about $100 million in cash in March, but has nearly $1 billion in stock, including movie and music rights and advances. That content and loyal audiences — Music has 134 million YouTube subscribers — is lucrative enough to spark a bidding war for its assets. In trying to pre-empt such a contest with Ambani, Sony wasted almost two years. It’s time to end the charade.

Disclaimer: This is a Bloomberg article, and these are the author’s personal opinions. It does not reflect opinions Or the Business Standard newspaper