Inside the battle to control ZEE Entertainment

As the high decibel drama in the boardroom of homegrown entertainment company, ZEE Entertainment, unfolds, the only question in everyone's mind is whether MD and CEO, Punit Goenka would be able to safeguard his position. Friends and foes of Founder, Subhash Chandra, say he will not give up easily. Last time, despite having to dilute 36% of the family's 40% stake to settle his Rs 11,000 crore debt, Chandra ensured that his elder son, Punit continued to be at the forefront of the business. Will he be successful this time round? Unlikely, say industry observers, but Chandra is certainly leaving no stone unturned. "Parleys are on to negotiate a truce for Punit to stay on for at least a year. Chandra will never accept defeat," says a former Zee employee.

On the night of September 13, two of ZEE’s long-serving non-executive board members, Ashok Kurien and Manish Chokhani, resigned following murmurs of them being involved in insider trading. The very next day, the company’s largest stakeholder, US-based hedge fund, Invesco Developing Market Funds (which owns a 18.44% stake), called for an EGM to oust Punit. The company has frequently been in the news on charges of tax evasion, siphoning off funds to various promoter entities and other corporate governance issues which has not augured well with the institutional investors.

In fact, when report of Punit’s imminent ouster came out in the open, ZEE Entertainment’s stagnant stock prices spiraled by over 40%. The investor community which had lost faith in the promoters, post the 2019 debt debacle (the company’s stock prices had more than halved) was elated at the prospect of a new ZEE under the leadership of a professional management.

Sorting out governance issues would be key to finding a strategic investor. However, even if the governance issues are sorted, a large section of the industry believes that getting a strategic investor to buy ZEE will not be easy. “Disney has already invested in Star, AT&T Warner Bros is not interested in the TV business in India and I am not sure if Sony Pictures Network has the appetite to expand in India any further,” points out the former CEO of the media company. When ZEE promoters were looking out for strategic investors in 2019, they were known to be in advanced discussions with Sony Pictures Network and Comcast and the reason both the deals fell through were due to governance issues. “A company like Comcast which has no experience of doing business in India, will obviously be wary of investing in a company ridden with governance issues,” the former CEO further adds.