Zee Entertainment shares were down a massive 25 per cent on Tuesday.

Zee was trading at Rs 173.85, down 25 per cent at the lower circuit.

After more than two years of deliberation, Sony has terminated its merger cooperation agreement (MCA) with Zee and sought a termination fee of USD90m from the company for an alleged breach of the MCA.

Zee has said that it would evaluate all its options, including a legal action. Surprisingly, it has mentioned that Punit Goenka, Zee’s MD and CEO, had agreed to step down, a key bone of contention between the two parties. "As a result, we downgrade our rating on the stock to Neutral," Motilal Oswal Financial Services said.

The company’s performance has been abysmal for the last four years as ad revenue declined 14 per cent over FY20-23 due to weak market conditions and continued market share loss over the last 4-5 years, from over 20 per cent to sub-17-18 per cent.

At a time when the industry is seeing a shift toward OTT, Zee5 individually would be on a weak footing, playing the second fiddle in a market dominated by strong players like Disney, Netflix, Amazon Prime, and Reliance Industries-led Network18. This is unlike the linear TV market, in which it has maintained its position among the top two players for a prolonged period, the report said.