Sony-Zee merger update: Sony Group is considering calling off the $10 billion merger between its India unit and Zee Entertainment Enterprises Ltd, news agency Bloomberg reported, quoting sources. The move comes after a two-year saga marred by drama and delays, with a significant standoff over whether Zee's CEO, Punit Goenka, would lead the combined entity.

The 2021 agreement had initially designated Goenka as the head of the new company. However, Sony is now reconsidering this decision due to an ongoing regulatory probe. The termination notice might be filed before the January 20 extended deadline, citing unmet conditions for the merger.

Despite ongoing discussions between the two parties, the resolution of the leadership dispute remains uncertain.

The scuttling of the deal, if it occurs, leaves Zee vulnerable to potential defaults. This development aligns with Mukesh Ambani's efforts to strengthen Reliance Industries Ltd’s media ventures, negotiating a merger with Walt Disney’s India unit.

The Sony-Zee collaboration aimed to create a $10 billion media powerhouse, positioned to compete with global giants like Netflix and Amazon, along with local heavyweight Reliance. Zee had previously requested an extension of the December 21 deadline, with Sony seeking proposals to address remaining critical closing conditions.

The Securities and Exchange Board of India (SEBI) alleged in June that Zee engaged in fraudulent activities to conceal private financing deals.