Sony Group is expected to make a pivotal decision regarding its $10-billion merger with Zee Entertainment Enterprises during a board meeting on Friday. According to insiders, the company might even announce the potential termination of the deal to the Tokyo Stock Exchange early next week.

What Happened? Announced two years ago with the ambition to create India’s largest broadcast company, the merger now faces uncertainty. According to a report by the Economic Times, Culver Max Entertainment (formerly Sony Pictures Networks India) and Sony in Tokyo have scheduled back-to-back meetings, signalling a crucial phase in the deal’s journey.

Sony is likely to resolve to end the “good faith discussions,” potentially scrapping the merger, unless Zee Entertainment’s MD and CEO, Punit Goenka, agrees not to hold his current positions in the merged entity. The resolution will also demand the fulfilment of all outstanding condition precedents (CPs), which have reportedly strained the relationship between the two corporations.

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Sources close to Zee maintain that negotiations are continuing and they have met the operational condition precedents (CPs). However, Sony insiders indicate that even if Goenka steps down, CPs will need auditing and financial adjustments. Since the merger announcement, Zee’s net profit has significantly declined, adding to the complexities.

What we know: Sony, planning a 53% stake in the merged entity, had agreed to a $1.6 billion investment to expand its footprint. However, amid rising regulatory challenges and delays, Sony appears to be reconsidering its approach, favouring NP Singh, its India MD and CEO, as the interim chief executive of the new entity.

The merger, intended to create a 74-channel media giant, is at a crossroads. This development occurs as the Indian media landscape undergoes significant consolidation, including the Reliance-Disney deal set to conclude by the end of the current fiscal year.

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