Zee chairman R Gopalan labels Sony's unilateral merger termination as 'premature' amid good faith negotiations
In a conference call with investors, Gopalan attributed the performance dip since 2020 to Covid and related disruption, macro headwinds like advertisement spending slowdown, and merger related issues.
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The Board of Zee Entertainment Enterprises Limited (ZEEL) engaged with investors in a conference call on Monday to discuss key topics and address their concerns. In his opening remarks, ZEE Chairman R Gopalan emphasised that ZEEL remains a strategic asset, well-positioned in the Indian M&E (media and entertainment) landscape.
Highlighting ZEEL's role and efficient operations, Gopalan stated that the company has consistently outperformed deep-pocketed MNC players over several years.
He also pointed out ZEEL's strengths, including a robust brand, market position, debt-free balance sheet, and cash-generating business.
Gopalan attributed the performance dip since 2020 to Covid and related disruption, macro headwinds like advertisement spending slowdown, and merger related issues.
“Through the last few years there have been intense and prolonged merger related activities which has taken time, energy and share of management bandwidth impacting operations and business,” he said.
The $10 billion dollar merger with Sony that was terminated in January 2024 had the shareholder’s worried.
“On merger failure with Sony, I will reiterate that ZEEL Board and management was fully committed for the completion of the merger, by undertaking several permanent and irreversible steps. Punit Goenka was also agreeable to step down in the interest of the merger. However, by its communication dated 22-Jan-2024, Sony unilaterally terminated the merger co-operation agreement and initiated legal proceedings,” he said.
“This unilateral move by Sony was premature as ZEEL was still engaged in good faith negotiations and was taking the required steps in the course of its integration journey over the last two years, to ensure that the scheme is implemented at the earliest,” Gopalan added.
Talking of future plans, Gopalan said that the board expresses complete confidence in the ZEEL management team's execution capabilities. Recognising substantial opportunities for performance improvement, the ZEEL management team has initiated a robust revival plan to expedite growth and boost profitability.
Additionally, the Board of Directors has also decided to closely oversee the business model and plan presented by Punit Goenka.
ZEEL has also set some ambitious targets. These include achieving an 18 percent-20 percent EBITDA margin by FY26.
The company reported a Q3 FY24 EBITDA margin of 10.2 percent.
In the call, Gopalan assured that the Board has always kept shareholder’s interest at the heart of its functioning and is committed to their value enhancement.
“The Board has taken several incremental steps to bring in additional measures to protect all stakeholders and enhance intrinsic value of the company through this phase,” Gopalan said.
