Intense merger activities impacted operations, business: ZEEL Chairman

Intense and prolonged merger-related activities have impacted operations and business, Zee Entertainment Chairman R Gopalan said adding the company has now taken several incremental steps to protect all stakeholders and enhance its intrinsic value through this phase.

There is "significant room for performance enhancement" and a revival plan by the management team is already being put in action to accelerate growth and enhance profitability, said Gopalan in the opening remarks of an investor conference call of Zee Entertainment Enterprise Ltd (ZEEL) on Monday.

The board has also decided to closely monitor the business model and plan presented by the MD & CEO of the company wherein he has provided the roadmap to improve the performance and efficiency of each of the businesses to achieve higher EBITDA.

"We are fully cognizant that significant room for performance enhancement exists and a revival plan by the ZEEL management team is already being put in action to accelerate growth and enhance profitability," he said, adding the board has full confidence in the ZEEL management team's execution capability.

Since 2020, ZEEL's performance has been impacted due to industry-wide macro slowdown, transitory issues, and management bandwidth constraints due to merger activities, he added.

"There have been primarily three issues which have impacted the performance since 2020 firstly Covid and related disruption, second as ZEEL was recovering from Covid, the industry was hit by macro headwinds like advertisement spending slowdown, and lastly 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

Zee had earlier announced a merger with Sony Pictures Network India, which could have created a USD 10.5 billion media entity in the country. However, it was called off by the Sony Group in January, and both sides are now mired in litigation and arbitration.

According to Gopalan, ZEEL has a strong brand, market position, debt-free balance sheet and cash-generating business.

"ZEEL is a strategic asset and is well positioned in the Indian M&E landscape. ZEEL has not only been a pioneer in the industry but has also run very frugal operations, consistently beating deep-pocketed MNC players for several years," he said.

Last month, ZEEL reported a decline of 2.36 per cent to Rs 2,073.36 crore in its consolidated total income for the third quarter ended in December 2023.

On failure to merge with Sony, Gopalan said the ZEEL Board and management were fully committed to 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 cooperation agreement and initiated legal proceedings," he said.

Terming Sony's unilateral move as "premature", Gopalan said ZEEL was engaged in good faith negotiations and was taking the required steps to ensure the merger scheme is implemented at the earliest.