(Bloomberg) -- Sony Group Corp. is said to have withdrawn the agreement to merge its India operations with Zee Entertainment Enterprises Ltd. from a local company court, taking the final step in scrapping a two-year-old plan that sought to create a $10 billion media giant.

The Japanese entertainment firm made multiple filings to India’s National Company Law Tribunal on Thursday to pull out of the merger pact with Zee, people familiar with the situation said, asking not to be identified as they are not authorized to speak publicly. 

Representatives for Sony and Zee didn’t respond to phone calls and emails seeking comments.

While the court filings officially bring the curtain down on the long-drawn saga that was beset by delays, drama over who’ll lead the merged entity and a regulatory probe on Zee’s founders, legal wrangles will likely continue. 

Sony had sent the termination notice to Zee on Jan. 22 for failing to meet the merger agreement conditions and sought $90 million in break-up fees. Zee “categorically” denied that it had breached the pact announced in December 2021. 

Read More: Sony to Continue to Arbitrate Zee Merger Case in Singapore

The deal collapse has also left both companies more vulnerable while their rivals bulk up. Reliance Industries Ltd. and Walt Disney Co. announced a merger of their India media businesses on Wednesday, creating a $8.5 billion behemoth that will be the largest broadcasting and digital company in the world’s most-populous market.

Sony will also review its strategy in the country after Disney folds its India media business into a joint venture with Reliance, the people said. 

Read More: Ambani Cements India Media Dominance With Disney Merger

Larger Entity

The Reliance-Disney combine will hurt other industry players, including Zee, as they would have to compete with a much larger entity, Pulkit Chawla, a sector analyst with Emkay Global Financial Services Ltd. wrote in a report Thursday. “Content producers and advertisers are likely to gravitate toward the Reliance-Disney entity, which will also cater to the largest set of audience,” Chawla wrote. 

Local media Mint reported earlier this week that Sony’s local unit and broadcaster Sun TV Networks have begun initial talks on buying a strategic stake in Arha Media & Broadcasting, which runs the video platform aha. Sony denied it later, calling it an unfounded speculation.

Meanwhile, India’s market regulator has found a hole of more than $240 million in the accounts of Zee, Bloomberg reported Feb. 21, citing people familiar with the matter. Zee said a day later that it was cooperating with the regulator, calling reports on accounting issues “incorrect.”

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