Zee Ent tanks 13% in worst day since Feb 2023 as Sony may call off merger

The stock ended off lows after ZEEL issued a clarification and called news of the Zee-Sony merger termination baseless and factually incorrect

Shares of Zee Entertainment Enterprises (ZEEL) tanked 13 per cent on the BSE to Rs 242.20 in Tuesday’s intraday trsde, but ended slightly off lows at Rs 256.25 (down 7.6 per cent) after ZEEL issued a clarification and called news of the Zee-Sony merger termination baseless and factually incorrect.

"Zee is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger," the company said in an exchange filing on Tuesday. READ MORE

By comparison, the benchmark S&P BSE Sensex index rose 0.04 per cent on Tuesday.

Earlier today, the stock of the TV broadcasting & software production company reported its sharpest intra-day fall since February 23, 2023 when it fell 14 per cent, as per BSE data.

The average trading volumes on the counter jumped over six-fold today. A combined 57.39 million equity shares, representing nearly 6 per cent of total equity of ZEEL, changed hands on the NSE and BSE till 10:22 AM.

According to a Bloomberg report, Sony Group Corp is planning to call off its merger with ZEEL, citing people aware of the matter. The Japanese conglomerate is likely to send the termination letter to ZEEL before January 20.

Last month, the two companies were given a one-month grace period to close the merger of their India operations that would have created a $10 billion media behemoth.

Zee had requested an extension. Sony said it wanted to hear Zee's proposals for completing the "remaining critical closing conditions". CLICK HERE FOR FULL REPORT

Meanwhile, the Cricket World Cup during October-November is likely to impact advertising revenue growth for ZEEL in the December quarter (Q3FY24).

Ad revenue recovery remains gradual and analysts at Emkay Global Financial Services expect a decline of 3.5 per cent year-on-year (YoY). Market share should also decline sequentially owing to the cricketing event.

"We expect flat YoY growth in subscription revenue, as Q3FY23 saw one-off revenue of Rs 48.5 crore. Other sales and services revenue should also decline sharply by 70 per cent QoQ due to no major movies," they estimate. 

Consolidated revenue should decline 11 per cent QoQ due to lower revenue from other sales and services.

EBITDA margin should decline to 11 per cent from 13.6 per cent in Q2FY24 given lower revenue,” the brokerage said in the Q3FY24 preview note.