Even though the board of Zee Entertainment Enterprises Limited (ZEEL) recently renewed Punit Goenka’s term as the managing director and CEO for five more years, he may face an uphill task to garner shareholder support at the voting in November 28 AGM which will begin on November 24.
Analysts note that ZEEL’s institutional shareholders, including domestic mutual funds and foreign portfolio investors (FPIs), will play a critical role in determining Goenka’s continuity. Under the Companies Act, his reappointment requires a simple majority, giving institutional investors significant influence. Public shareholders, including LIC, ICICI Prudential MF, Vanguard, and Norway’s Government Pension Fund Global, collectively hold 96 percent of ZEEL shares, with Sebi regulations requiring institutional votes on board appointments. Analysts suggest that the vote will reflect confidence levels among shareholders regarding ZEEL’s governance and future.
Notably, Goenka, whose family owns around 4 percent of ZEEL and retained the management control yet, has faced investor scrutiny on multiple fronts, including the failed $10-billion merger with Sony, which was billed to establish ZEEL as part of one of India’s largest media conglomerates. The merger, agreed upon in December 2021, fell through in early 2024, disappointing many shareholders with missed growth potential. ZEEL’s stock has since dropped by almost 48 percent, erasing approximately Rs 10,700 crore in market value, further impacting the investor sentiment.
The merger, first agreed upon in December 2021, faced delays and conditions that Sony ultimately said ZEEL failed to meet. Zee Entertainment for its part said that it was prepared to meet Sony’s conditions and even moved the NCLT to seek implementation of the merger. Both parties also moved the Singapore International Arbitration Center (SIAC) seeking $90 million in termination fees from each other.
While ZEEL and Sony have now settled all merger-related legal claims, with no outstanding liabilities as of August, ZEEL’s challenges persist.
Cricket broadcast row
ZEEL is also contending with a $940-million damages claim filed by Disney India over a cricket broadcast rights deal that collapsed earlier this year. ZEEL has refuted Disney’s claims. The claim centres on a sub-licensing agreement for television broadcast rights for International Cricket Council (ICC) events. Disney initially won a bid in 2022 for exclusive rights to men’s and women’s ICC events from 2024 to 2027, later sub-licensing the men’s and under-19 tournament rights to ZEEL for a $1.4-billion fee. However, ZEEL reportedly missed a $200-million initial payment in January, prompting Disney to question ZEEL’s financial stability and future obligations. Analysts say the dispute further strains ZEEL’s finances as it deals with investor concerns about governance and strategic direction.
Since the Sony deal’s collapse, ZEEL has sought to strengthen its financials, setting a target of 8-10 percent revenue growth and an 18-20 percent EBITDA margin by FY26. Cost-reduction measures have cut losses at digital platform Zee5 by 40 percent since Q4 FY24, though concerns remain about ad revenue growth. Analysts at Emkay Global suggest that regaining investor confidence may require a strategic partnership or acquisition, as ZEEL’s standalone growth could prove insufficient for a stock re-rating.
Board backing for Goenka
Despite these challenges, ZEEL’s board has expressed support for Goenka, highlighting efforts to streamline the company’s broadcast, digital, movies, and music segments. Goenka has assumed direct responsibility for critical areas, including revenue generation and the domestic broadcast business. The upcoming shareholder vote is likely to reveal investor sentiment on his leadership and ZEEL’s strategic future.
Apart from Goenka, ZEEL’s board comprises its Chairman R Gopalan, a former bureaucrat, and four independent directors - Deepu Bansal, Shishir Desai, Uttam Agarwal and Venkata Pinisetti.
Investors will also closely watch ZEEL’s settlement process with Sebi, as its outcome could influence the company’s broader governance and growth prospects. ZEEL’s October settlement application with markets regulator, under Sebi's settlement regulations, could allow it to conclude the probe by paying a penalty or implementing corrective actions. Sebi had previously barred ZEEL’s founders, Subhash Chandra and Punit Goenka, from holding directorial or key roles across ZEEL companies due to allegations of fund misappropriation. The ban was overturned by the Securities Appellate Tribunal (SAT) in October, allowing Goenka to resume his role as ZEEL’s managing director and CEO.
Punit Goenka has previously faced significant investor backlash, particularly in 2021 when Invesco, then Zee's largest shareholder, called for his removal. Invesco's Developing Markets Fund and its OFI Global China Fund LLC, which together held nearly an 18 percent stake in Zee, proposed the appointment of six new independent board members and advocated for Goenka’s ousting as CEO. Legal filings at that time highlighted concerns over corporate governance and financial irregularities at Zee, underscoring the ongoing scrutiny of Goenka's leadership. However, Invesco withdrew its demands after the announcement of Zee-Sony merger.
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