Sony-Zee merger talks: Sony had turned down Punit Goenka’s proposal for replacement of CEO

Mumbai: Zee Entertainment Enterprises managing director and CEO Punit Goenka had proposed a solution to end the deadlock in the Sony-Zee merger talks – by offering to replace himself as CEO soon after taking charge of the merged entity, two people with knowledge of the matter said. But Sony scuttled the idea, insisting on NP Singh as its candidate for the corner room, they said.

“Goenka had proposed to Sony that he was open to an independent search process to find a new CEO to replace him after he takes over,” one of the individuals cited above told ET. “He was even willing to offer guarantees. However, Sony favoured NP Singh as the CEO for the Zee-Sony merged entity.”

The person said Goenka’s concern was that “as the CEO of Zee, he should feel comfortable with the leadership of the merged entity, which he clearly wasn’t with Sony’s choice”.

Earlier, Sony had opposed the idea of Goenka taking over as the managing director and CEO of the merged entity, citing stock market regulator Sebi’s probe against him and his father Subhash Chandra for alleged fund diversion from Zee to promoter group companies.

As part of the scheme of arrangement signed in December 2021, Goenka was to be the MD and CEO of the merged entity for five years “subject to and on the terms as agreed between Punit Goenka and Sony Pictures Networks India (SPNI)”.

On December 20, Sony agreed to extend the deadline by a month to make the merger scheme with Zee effective. The one-month good-faith negotiations between the two companies – agreed upon on December 20 – will end on January 21.The main hurdle to the completion of the merger is the tussle between Goenka and Sony Pictures Entertainment’s top brass over who will become the CEO of the merged entity, the people said.

While Sony is batting for its long-time media executive Singh, Goenka believes that the Securities Appellate Tribunal’s (SAT) verdict setting aside the Sebi orders banning him from holding the top executive position has cleared the way for him to become the MD and CEO of the Sony-Zee combined entity.

Another person aware of the negotiations said Sony had offered Goenka an advisory role and a board seat. “Sony is not averse to increasing the Rs 1,100 crore non-compete fee that they will pay the Goenkas,” the person added.

Sony and Zee refused to comment.