SEBI intervention spooked Sony, scuttled merger with Zee, alleges Subhash Chandra

Subhash Chandra, chairman emeritus of Zee Entertainment Enterprises Ltd (ZEEL), accused Madhabi Puri Buch Chairman of Securities and Exchange Board (SEBI) of scuttling the Sony-ZEEL merger.

In a press conference on September 2, Chandra termed Buch “corrupt” and “vindictive” and alleged that Zee’s issues with SEBI was “main reason” behind the merger’s failure.

“SEBI has not been acting in the interest of investors of ZEE Entertainment. ZEE Sony merger was progressing well and they had got SEBI/ Stock exchange approval. Despite the same, SEBI instructed BSE/NSE to intervene in NCLT proceedings and scuttle the merger by spooking Sony. Ultimately the merger was terminated by Sony which resulted in erosion of huge wealth of minority shareholders,” Chandra alleged.

“I am convinced that the SEBI chairperson is corrupt since she and her husband, whose combined income was around Rs 1 crore per annum before she assumed the position at SEBI, has now gone up to Rs 40-50 crore per annum. This needs to be investigated by the media and investigating agencies, including an analysis of the settled and compounded cases and the consultation fees paid by such corporates and received by the SEBI chairperson and her connected persons. These are many ways she and her husband extort money from corporates and stock market corrupt operators and fund managers,” he alleged.

In the press conference, Chandra said, “On 25th January 2019 on the day when ZEE shares plunged by 33% and we could not pay the margin call, I issued an Open Letter which alluded to the fact that:

• All operating companies of the Group were performing exceptionally well and were under no stress whatsoever.
• The letter also explained the reasons for increased debt exposure at Group level. For instance, investments made in Essel Infra, Acquisition of D2H, etc.
• The letter further stated that from May / June 2018, negative forces have been acting against the Group. We wrote a number of complaints to SEBI, other concerned authorities to investigate, however all our eZorts did not result in any action.
• In this letter, I urged the lenders to maintain patience and assured them that I will positively be able to pay the lenders dues; once the process of ZEE stake sale is complete.

“I have been informed that if one gets an access to the communications and messages between connected persons like Chanda Kochhar and Madhabi Puri Buch, their modus operandi will be out in open. It was Chanda Kochhar and her husband; and Madhabi Puri Buch and her husband; working in tandem, hence Madhabi Puri Buch was paid hefty sums of money by ICICI while she was the Whole Time Member at SEBI,” he added.

Business Today has reached out to SEBI chief and the copy will be updated with her response when it is made available.

Zee-Sony merger deal
The NCLT on August 10, 2023, had approved the merger of Zee Entertainment and Sony Pictures Networks India, paving the way for the creation of a $10-billion media giant in the country.

In January 2024, the merger between Sony and Zee was called off due to disagreements over more than 20 compliance issues. The disagreement involved issues such as Zee’s failure to dispose of certain Russian assets and its $1.4 billion cricket rights deal with Disney.

One of the major reasons the failed deal being derailed was the lack of consensus over who would head the merged entity. While ZEEL MD and CEO Punit Goenka earlier agreed upon as the candidate to be at the helm of the merged company, Sony reportedly sought a reconsideration after Goenka came under a SEBI probe.

As of June 2024, promoters hold 3.99 percent stake in Zee Entertainment Enterprises, FIIs hold 18.91 percent, DIIs hold 22.51 percent and the public shareholding stood at 54.59 percent. Business Today