Sony’s $10 billion India media deal ends in ugly breakup

A dramatic acquisition saga in one of the world’s fastest growing media industries is headed for a bitter ending.

Sony Group (SONY) has called off the merger between its India unit and Mumbai-based Zee Entertainment, the Japanese company said on Monday.

The deal was announced two years ago and would have created a $10 billion media entity in India, with a war chest to take on homegrown rivals as well as global streaming giants such as Netflix (NFLX) and Amazon (AMZN), according to analysts.

Sony’s move to end talks comes at a time when Disney (DIS) and Mukesh Ambani’s Reliance Industries are discussing combining their Indian media businesses.

In its statement, Sony said “the closing conditions to the merger were not satisfied,” and added that it “does not anticipate any material impact on its consolidated financial results as a result of the termination of the definitive agreements for the merger.”

It did not specify the unmet conditions, but according to media reports there were tensions between the two companies over who would lead the combined entity.

Zee had proposed its CEO, Punit Goenka, as the leader of the merged company, but Sony had disagreed as he was being probed by India’s market regulator, Reuters said.

In its statement, Zee said it has received the termination letter and “is evaluating all the available options.” The company also said that Sony is seeking a termination fee of $90 million “on account of alleged breaches” by Zee of the merger terms.

Zee “categorically denies all the assertions … including their claims for the termination fee,” the statement added.

The breakup comes at a time when competition is heating up in India’s entertainment industry.

With its relatively free market and vast English speaking population, the world’s most populous country is an attractive destination for global entertainment companies.

Prime Minister Narendra Modi’s government expects the nation to soon become the world’s third largest media and entertainment market, from fifth currently.

If the Disney-Reliance deal goes through, it would not only help the American company shore up its position in India, but also create a massive entity with over 100 TV channels and two streaming platforms.

For more CNN news and newsletters create an account at CNN.com