According to a rumor, Zed Entertainment Limited (ZEEL) may sue Culver Max Entertainment (Sony India) for damages if the long-awaited merger between the two companies does not take place by January 20.

Top firm officials told Hindu Business Line that Zed was forced to terminate key profitable ventures in order to meet the Competition Commission of India's merger terms. If the transaction fails at this level, Zed will suffer significant losses.

"For the merger, both Zed and Sony have to agree to some voluntary structural fixes offered by CCI. For this, Zed had to divest three Hindi channels: Big Magic, Zed Action, and Zed Classic. "If the merger fails, Zed will suffer a loss," a corporate source added. The arrangement, signed in 2021 between Zed Entertainment and Sony Pictures Networks India, provided a two-year period for the merger to be completed by December 21, 2023.

The initial agreement between Zed and Sony included $100 million in penalties if either party walked away and failed to complete the transaction. However, this arrangement expired on December 21. The two parties decided to extend the discussions by 30 days and have been working to finalize the long-awaited agreement before the January 20 deadline. According to the article, because the clause in the agreement has expired, Sony may avoid paying the penalty if it chooses to end the deal.

Culver Max Entertainment (formerly known as Sony Pictures Networks India) and ZEEL signed a non-binding term pact in 2021 to merge their linear networks, digital assets, production divisions, and programming libraries. Earlier this month, it was rumored that Sony may issue a termination notice before January 20 since it is no longer willing to pursue the purchase.

According to Bloomberg, Sony is considering canceling the $10 billion merger because it is no longer happy with Pawan Goenka running the merged business due to various regulatory probes. The proposed merger has already gotten regulatory permission from the Competition Commission of India (CCI), the NSE and BSE stock exchanges, the company's shareholders, and its creditors.

Sony began having problems as a result of Goenka's problems with the markets regulator Securities and Exchange Board of India and advocated replacing Goenka with Sony India CEO NP Singh. Initially, Goenka consented to the merger without him for the top role. He altered his mind after receiving temporary relief from the Sebi probe after the Securities Appellate Tribunal (SAT) approved the transaction. Goenka now wishes to maintain the original terms of the deal.

In June of last year, Sebi accused Goenka and Zed Group Chairman Subhash Chandra of stealing corporate cash. However, in October, SAT lifted Goenka's prohibition, preventing him from holding board positions in Zed Group companies. At 9.30 a.m. on Wednesday, Zed Entertainment shares were trading at Rs 255.80, up 0.93 percent from the previous closing.