He has announced Zee's intention to pursue legal action against the Japanese company for damages.
Subhash Chandra, chairman emeritus of Zee Entertainment Enterprises, has accused Sony of deliberately obstructing a potential merger. In interviews to Economic Times and LiveMint, Chandra alleges that Sony thwarted the proposed merger even after the Zee promoters offered to have Punit Goenka step aside from the chief executive's post. He has announced Zee's intention to pursue legal action against the Japanese company for damages.
“We will have to. If I were the CEO of the company, I would have sued them already. I can prove that it was Sony's criminal design to start the merger process and then withdraw. As a promoter, I am seriously considering filing a criminal case against Sony,” he said.
After two years of announcing its decision to merge with Zee, Sony called off the merger on January 22, 2024. Reports suggest that the two companies parted ways after they could not decide the head of the merged entity, as Sony was unhappy with the initial choice of Punit Goenka. However, Chandra said Zee had offered that Goenka will step aside.
“As the founding family, we wrote to them and we had decided that even if Sony is demanding Punit’s separation, we will agree to it but let us at least meet once. But they even refused to give me time for a meeting to close this discussion,” he shared with LiveMint.
Speaking to ET, he further alleged that Sony's strategy was to engage with Zee and eventually withdraw, portraying Zee as vulnerable.
“On December 14-15, the matter was discussed within the family. Punit and the family collectively decided he should step aside, and the merger should proceed because it was beneficial for Zee. This decision was communicated to Sony. It wasn't acceptable to Sony,” he said.
Zee's share price crashed 33% on January 23, and the market cap has fallen to Rs 15,680 crore. Speaking about the minority shareholders’ losses, he asked them to have patience for three to four quarters with his son Punit Goenka as he is still the best person to run it. He further asserted that there is no problem with Zee and it is a profitable, zero-debt company.
“I believe the worst is behind us. On January 26, 2019, I gathered 38 lenders in our boardroom and assured them that I would repay them, asking only for some time. They granted me that time. Today, I'm conveying a similar message to our minority shareholders: Have patience for three to four quarters with Punit and the board, and you will see the results. The company will rebound to the levels it once achieved. At its peak, Zee's Ebitda was Rs 2,400 crore, and it will reach those numbers again,” he said to ET.
The promoters’ family are now controlling the company with just 3.99% equity stake. The Zee founder disclosed plans for the promoter family to increase its stake in the company by 5%, aiming to eventually reach a total of 26%.
“We eventually want to go back to 26%, but it will take time. Yes; we will need a lot of money. But we are clear that we are not going to raise funds from the outside. We don’t want debt. It’s not going to be overnight, but that’s the intent,” LiveMint wrote.
Speaking about the way ahead for Zee, Chandra said, several large private equity firms had approached, with offers to provide loans and increase promoter shareholding. However, he feels he doesn’t have the appetite for additional debt. “I've worked hard to extricate myself from such situations, and it took me five years. Now, I lack the courage to take on more debt,” he said.