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India's Zee Entertainment said on Tuesday it was committed to its merger with Sony's local arm, after media reports said the Japanese firm was planning to scrap the $10 billion deal.

Zee said reports of the deal falling through were "baseless and factually incorrect," and that it continues to work towards closing the deal.

Sony plans to file a termination notice before the Jan. 20 deadline to close the deal over an impasse on whether Zee CEO Punit Goenka, who is facing a regulatory probe, will lead the merged company, Bloomberg News said on Monday.

Zee's shares closed down nearly 8%. They sank nearly 14% earlier on concerns about the fate of cash-strapped Zee in a highly competitive market, if the merger did not go through.

Analysts say the deal is crucial to the companies' survival amid the looming merger of local heavyweight Reliance Industries and Walt Disney's Indian media and entertainment businesses.

The merger was also aimed at taking on streaming giants Netflix and Amazon.com.

Zee, which has been struggling with declining advertisement revenue, saw its cash reserves fall to 2.48 billion rupees in the six months ended Sept. 30, from 5.88 billion rupees in the year-ago period. Its net profit slumped 68% in the same period.

"It would be surprising if the merger collapses as both companies will find it incredibly difficult to operate as single entities in India, keeping in mind the ongoing merger proceedings between Reliance and Disney," said Vivekanand Subbaraman, research analyst at brokerage Ambit Capital.

Zee's four-year pact with Disney's Star for TV broadcasting rights of certain cricket events will also be in jeopardy if the deal collapses, considering Zee would have to pay $1.32 billion to $1.44 billion over the tenure of the deal, analysts at Emkay Global said.

"Such a large payment will not be justified on a standalone basis," they said.

The broadcaster missed an early-January deadline to pay $200 million to Disney for TV rights of cricket matches, Bloomberg News reported. Zee and Disney did not immediately reply to requests for comment on the report.

The merger was delayed after India's markets regulator last year barred Goenka from directorships of any listed company over allegations that he was involved in diverting company funds, although a tribunal lifted the ban in October.

Sony and Zee were in talks and a resolution could still emerge, Bloomberg reported.

Sony did not respond to Reuters' request for comment on the merger. Its shares ended the day up 1.3%. ($1 = 83.0844 Indian rupees)