Zee Entertainment's troubles grew on March 15 after Walt Disney-owned Star India initiated arbitration proceedings against it for alleged non-compliance with the terms of a $1.4-billion cricket broadcasting agreement between the companies. Star India has asked company to pay damages for non-compliance.
Zee Entertainment Enterprises recently cancelled the deal for broadcasting ICC men’s and under-19 tournaments after Sony pulled out of a $10-billion merger deal.
At 1310 hours on March 15, Zee's shares on BSE were trading 3% lower at Rs 142.2 apiece.
Under the Arbitration Rules of London Court of International Arbitration, Star India claimed that Zee is in non-compliance with the terms of the agreement dated August 26, 2022.
"Star India Private Ltd has claimed that the Company is in non-compliance with the terms of the Alliance Agreement dated 26 August 2022 which had been executed between Star and the Company for setting out the basis on which Star would be willing to grant the sub-license rights for the ICC men’s cricket events from 2024 to 2027. Star has sought specific performance of the Alliance Agreement (or alternatively, to pay damages, which are yet to be determined)," said Zee in a stock exchange filing.
Zee said it disagrees with Star's claim and will be filing "appropriate response".
"The Company, based on its preliminary assessment of the Application, and on legal advice received, disagrees with the averments made by Star in the Application and will be filing appropriate response to the said Application, make counterclaims and undertake such actions, as may be required," said Zee.
In 2022, Disney Star had licensed a part of the ICC rights it won for the Indian market to Zee Entertainment Enterprises. The agreement meant that Zee will broadcast the ICC men's and Under-19 tournaments in India for the 2024-27 cycle on exclusive basis, while Disney Star retains the digital rights for the same events.
There are four men's marquee events in the 2024-27 period, including two T20 World Cups (2024 and 2026), the 2025 Champions Trophy and the 2027 ODI World Cup.
In its FY23 annual report, Zee had said that the acquisition of ICC TV rights is "subject to certain conditions precedent, including submitting financial commitments, guarantees, and ICC approval for sub-licensing to the firm, which are pending".
Zee has been contending with declining profits, advertising revenue and cash reserves in a market where global streaming giants such as Netflix and Amazon.com are also jostling for share.
In January, Sony Group Corp said it is calling off the merger of its India unit with Zee Entertainment, following a stalemate over who will lead the merged entity.
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