The anticipated merger between Sony Group Corp.’s India unit and Zee Entertainment Enterprises Ltd. faces a pivotal moment in the coming week, with sources indicating that its fate may be decided soon. Both entities are on the brink of a significant decision: resolve their disagreements or risk abandoning a long-anticipated deal that aims to create a formidable $10 billion media conglomerate.

Unnamed sources familiar with the matter suggested that Sony could dispatch a letter to Zee next week, citing the inability to meet specified merger requisites. This potential move could signal the collapse of the deal, as insufficient time remains to finalize pending aspects before the approaching December 21 deadline.

At the core of the standoff lies a dispute over the leadership of the merged entity. Zee insists on Punit Goenka, its CEO and the founder's son, as the leader, as agreed upon in the 2021 pact. Conversely, Sony harbors reservations about Goenka's appointment due to an ongoing regulatory investigation. This disagreement has intensified as the merger's completion hangs in the balance.

While a Zee representative refrained from commenting on the leadership issue, the company asserted its active engagement in fulfilling the deal's prerequisites within the stipulated timeline. Most prerequisites have been met, and ongoing communication with Sony remains consistent, the representative affirmed. Sony's representatives have not provided any comments on the matter.

The Securities and Exchange Board of India (SEBI) had previously alleged improprieties against the Mumbai-based media house concerning loan recoveries to conceal private financing deals by its founder, Subhash Chandra. The interim order stated that Chandra and Goenka misused their positions and diverted funds, leading to an ongoing regulatory probe. Although Goenka received temporary relief from an appellate authority against SEBI's order, Sony perceives the ongoing investigation as a critical corporate governance issue.

As the Dec. 21 deadline looms, the resolution of these conflicts will determine the fate of the proposed merger, which has been marred by recent developments and delays, casting uncertainty over its completion.

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