After IDBI Bank, Axis Finance Limited has also filed an appeal before the NCLAT (National Company Law Appellate Tribunal), Delhi, challenging the NCLT (National Company Law Tribunal) approval for the merger of Zee Entertainment Ltd with Culver Max Entertainment, earlier known as Sony Pictures Networks India.

Zee Entertainment, in an exchange filing, says the company has been served with an "appeal on behalf of Axis Finance Ltd before the NCLAT, Delhi, challenging the order dated August 10, 2023, passed by NCLT, Mumbai Bench, approving the composite scheme of arrangement amongst Zee Entertainment Enterprises Limited, Bangla Entertainment Private Limited and Culver Max Entertainment Private Limited (formerly Sony Pictures Networks India Private Limited)".

ZEEL says there will be "nil" financial implications due to "compensation or penalty" on the company. Reacting to the development, the ZEE Entertainment stock opened lower than the previous session and surged to an intra-day high of ₹280.65, before settling at ₹273.25 on the BSE.

On September 5, IDBI Bank had also challenged the NCLT order with regard to the merger of Zee and Culver.

The company law tribunal in August 2023 had given its nod to the merger proposal of ZEE with Culver Max. The scheme was approved by 99.97% of ZEE shareholders, and also by other regulators.

Notably, IDBI had filed two separate petitions against ZEEL in respect of alleged defaults in loans availed by Siti Networks Limited (SITI) from IDBI, claiming a debt of around ₹163.92 crore. One petition was filed before NCLT, Mumbai Bench, against ZEEL; and the other before DRT (Debt Recovery Tribunal) against SITI, ZEEL, and ARM, jointly, for recovery of loans availed by Siti from IDBI. The NCLT petition was dismissed on May 19, 2023, against which IDBI filed an appeal before the appellate tribunal NCLAT, which is not admitted yet. The Debt Recovery Tribunal’s matter is still pending.

The ZEE-Sony merger deal was announced in December 2021 in order to create the largest entertainment network in the country. However, ZEE faced several hurdles and delays due to ongoing legal battles with capital markets regulator SEBI. The merger is expected to make the combined entity the largest media conglomerate in India, with a 28% share (leaving behind the current market leader, Disney-Star, with a 22% share). The combined entity will include 75 TV channels, two film studios – Zee Studios and Sony Pictures Films India, as well as two video streaming services – ZEE5 and Sony LIV, and digital content studio Studio NXT, which is currently under Sony Pictures Network.

Zee's April-June quarter net loss stood at ₹53.4 crore against a profit of ₹107 crore a year ago. The company's ad revenue for the said quarter stood at ₹193.9 crore, up 21% YoY. The company's Q1 FY24 EBITDA margin was recorded at 7.8%, while QoQ increased by 60bps year-on-year. The company says a pickup in subscription revenues was offset by a soft ad environment.

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