Punit Goenka’s Future at Zee Uncertain as SEBI Ruling is Upheld
Punit Goenka and Subhash Chandra, who are promoters of Zee Entertainment Enterprises Ltd (ZEE), are reportedly planning to challenge the recent order by the Securities Appellate Tribunal (SAT) in the Supreme Court. The SAT had dismissed their appeal against the Securities and Exchange Board of India’s (SEBI) ban on them holding board positions in publicly listed companies. Goenka and Chandra are expected to file their appeal in the Supreme Court to seek a reversal of the SAT’s decision.
The move comes after the SAT’s ruling on Monday, which upheld SEBI’s ban on Goenka and Chandra. The ban prevents them from holding directorial positions in any listed company due to alleged irregularities to a previous issue of convertible debentures. With their intention to challenge the SAT order in the Supreme Court, Goenka and Chandra seek to overturn the ban imposed by SEBI and regain their ability to hold board positions in publicly listed companies.
On 12th June, the Securities and Exchange Board of India (SEBI) imposed a ban on Punit Goenka and Subhash Chandra, alleging fund diversion, thereby prohibiting them from holding board positions in listed companies. However, the Securities Appellate Tribunal (SAT) recently declined to intervene in the matter, upholding SEBI’s decision.
As a result, legal experts suggest that Punit Goenka, the managing director and CEO of ZEE, will have to step down from his position unless the Supreme Court issues a different order. Subhash Chandra, who resigned as the chairman of ZEE in November 2019, currently does not hold any significant positions in the company.
The recent decision by the Securities Appellate Tribunal (SAT) not to intervene in the ban imposed by the Securities and Exchange Board of India (SEBI) on Punit Goenka and Subhash Chandra, the promoters of Zee Entertainment Enterprises Ltd (ZEE), holds significant implications. This decision comes at a crucial juncture as the Mumbai bench of the National Company Law Tribunal (NCLT) is currently reviewing the proposed merger between ZEE and Sony Pictures Networks India (now Culver Max Entertainment).
One of the conditions of the merger is that Punit Goenka will continue as the CEO of the merged entity. However, with the SAT’s decision and in the absence of a stay from the Supreme Court, Goenka may be required to step down from his position, creating potential complications for the merger process.
Punit Goenka, the CEO of Zee Entertainment Enterprises Ltd (ZEE), had expressed his strong support for the proposed merger with Sony Pictures Networks India (now Culver Max Entertainment) and emphasized that the merger should proceed regardless of his role as CEO.
In an interview, Goenka highlighted his commitment to the merger, stating that it should go through irrespective of his position within the company. His focus was on ensuring the successful completion of the merger, underscoring the significance of the deal and its potential benefits for the company.
If the promoters are unable to secure relief from the Supreme Court, it could potentially result in the exit of the first family of satellite television from the industry. Subhash Chandra, who is 72 years old, is widely regarded as a pioneer in the Indian media sector.
He played a significant role in the launch of Zee TV, India’s first private satellite channel, in 1992 in partnership with Richard Li’s Star TV, based in Hong Kong. Star TV was subsequently acquired by Rupert Murdoch and eventually by The Walt Disney Company. Chandra’s contributions and influence have been instrumental in shaping the Indian media landscape over the years.
Throughout his career, Subhash Chandra expanded his media empire to encompass various ventures. In addition to Zee Entertainment Enterprises, which remained the flagship company, he ventured into other sectors of the media industry. This included the establishment of Dish TV, a direct-to-home company, Siti Cable, a multi-system operator, and Zee Media, a news television network.
Chandra also ventured into print media with the acquisition of the newspaper DNA. These ventures allowed him to establish a diverse presence across different media platforms and solidify his position as a prominent figure in the Indian media landscape.
Since 2008, Punit Goenka, the elder son of Subhash Chandra, has held the position of CEO at ZEE while his father focused on expanding into other business sectors, particularly infrastructure. However, due to the debt incurred for these infrastructure ventures, which involved pledging their shares, the promoters’ stake in ZEE was reduced to just 3.99%.
In light of this, they pursued a merger with Sony Pictures Networks, signing a definitive agreement in December 2021. The merger was seen as a strategic move to strengthen ZEE’s position and address the financial challenges faced by the promoters.
Industry experts have expressed concerns about the prospects of ZEE if the merger with Sony Pictures Networks does not materialize. With the promoters holding a minority stake in the company, securing funds for new investments and competing with global giants like Disney, Netflix, and Amazon, as well as domestic players like Viacom18 (backed by Reliance Industries), could prove challenging.
These competitors have been aggressively expanding their entertainment businesses, posing a significant challenge for ZEE to maintain its market position and sustain growth. The merger with Sony Pictures Networks was seen as a strategic move to strengthen ZEE’s competitiveness and enhance its ability to navigate the evolving landscape of the media and entertainment industry.
