Media tycoon Subhash Chandra witnessed a significant blow to his media empire as the stock prices of four of his companies plummeted on Tuesday. Zee Entertainment Enterprises Ltd, the flagship company, took the biggest hit with a staggering 33% decline following the cancellation of a proposed $10 billion merger with Sony’s India unit.
The fallout extended to other companies under Chandra’s umbrella, with Zee Media Corp. Ltd, housing news channels, experiencing a 14% drop, and Dish TV India Ltd, the third-largest satellite TV provider in India, seeing an 8.3% decline. Zee Learn Ltd, already facing bankruptcy proceedings, also witnessed a 2% fall in its stock prices.
Investors bore the brunt of this downturn, witnessing a notional wealth erosion of ₹7,705 crore as the combined market capitalization of the four listed companies fell from ₹27,257.4 crore on Saturday to ₹19,551.65 crore by the end of Tuesday’s trading session.
The significant drop in Zee Entertainment’s stock prices marks its most substantial single-day fall in five years. The last comparable dip occurred on January 25, 2019, when the scrip plummeted by 26.6%, prompted by media reports of a federal probe into businesses owned by Subhash Chandra.
The catalyst for the recent market turmoil was the termination of the proposed merger between Zee Entertainment and Sony’s India unit. Sony cited various concerns, including legal, leadership, and compliance issues, leading to the cancellation of the deal. Investors had held high expectations for the merger, anticipating that the consolidated entity would become the largest media house in India.
Ashwin Patil, senior research analyst at LKP Securities, highlighted the impact of the terminated merger on Zee’s share prices. He noted that the stock, held with the belief that the merger would propel the company to new heights, faced a significant setback. Beyond the merger, Zee Entertainment is grappling with operational challenges, including subdued advertising business and declining viewership share in key markets like Hindi GEC, Tamil, and Marathi language markets.
The fallout underscores the intricacies and challenges faced by media companies in navigating the evolving landscape, marked by intense competition, changing consumer preferences, and the need for strategic partnerships. The cancellation of the merger raises questions about the future trajectory of Zee Entertainment and the measures Subhash Chandra’s companies will undertake to address operational challenges and regain investor confidence.
