Disney Star may take legal action against Zee Entertainment for backing out from $1.4 bn deal

Disney Star may legal actions against Zee Entertainment Enterprises for backing out from a $1.4 billion sub-licensing agreement for TV broadcast of international cricket matches in India, a report said.

Zee Entertainment has reportedly informed Disney Star that it won't honour their $1.4-billion deal for International Cricket Council's TV rights from 2024-2027.

Following this, Disney Star, which is the Indian arm of The Walt Disney Company, is said to be working on the next move, news agency PTI reported. If the rescinded agreement contained an arbitration clause, then Disney Star would have to resort to arbitration proceedings for the resolution of the dispute and if the agreement is short of the arbitration clause, then Disney could initiate legal proceedings to sue Zee for damages.

On August 30, 2022, Zee Entertainment announced that they had entered into a strategic licensing agreement with Disney Star under which it was given the television broadcasting rights for the ICC Men's and Under-19 global events for a duration of four years.Disney Star bagged the broadcast rights of all ICC events for four years from 2024 to 2027 for the Indian market from the sport's global governing body.

As per the agreement, ZEEL was supposed to have exclusive television rights for ICC men's events, including the ICC Men's T20 World Cup, which will be played in 2024 and 2026, ICC Men's Champions Trophy (2025), and the ICC Men's Cricket World Cup (2027), along with key ICC U-19 events, it said.

Sources told PTI that this is a fallout of the collapse of its merger deal with Sony.

ZEEL on Wednesday approached the corporate disputes tribunal the National Company Law Tribunal (NCLT) to get Sony to honour a $10 billion merger deal.

Zee Entertainment is already facing an arbitration plea by Sony Group at the Singapore International Arbitration Centre for not fulfilling the conditions of their merger agreement. It has claimed $90 million for the failure of the deal. As per the merger agreement between ZEEL and Sony, the Japanese entity was supposed to invest $1.575 billion in the merged entity and have a majority stake.

Three days after Sony called off the deal, ZEEL MD & CEO Punit Goenka addressed a town hall meeting of around 3,000 employees across the globe, in which he asked them to move forward and chase new opportunities.

"Our industry is witnessing rapid changes, and these winds of change are giving us a new shape. We have to mould ourselves to be well-positioned in order to capitalise on the opportunities coming our way. We have been leaders over the last 3 decades and have delivered value to our stakeholders, year on year," he said.

Also read: More trouble for Zee? Report says ED conducts searches at Essel Group's office in Mumbai

Also read: ZEE shares in focus amid reports of ED search at Essel group office, update on Sony deal termination