Zee Entertainment Enterprises Ltd (ZEE) has demanded Rs 69 crore in refund from Star after it opted out of the International Cricket Council television rights sublicensing agreement it had entered into with master rights holder Disney Star.
The refund claim is part of the agreement between the two media companies, according to ZEE in its Q3 financial statements.
ZEE has stated in its Q3 filings that it has communicated to Star India Pvt Ltd that it cannot proceed with the ICC TV rights agreement, while also alleging that Star has breached the agreement and is in default of the terms.
In its financial statement for the third quarter of FY24, ZEE said that it has also sought a refund of the Rs 68.54 crore ($8.25 million) that it had paid to Disney Star when the agreement was signed.
Regarding its claims, ZEE stated: “Based on the legal advice, the management believes that Star has not acted in accordance with the Alliance Agreement, and has failed to obtain necessary approvals, execution of necessary documentation and agreements.
“The management also believes that Star by its conduct has beached the Alliance Agreement and is in default of the terms thereof and consequently, the contract stands repudiated. The Company has already communicated to Star that the Alliance Agreement cannot be proceeded with for the reasons set out above and has also sought a refund of Rs 68.54 crore paid to Star.”
It was on 26 August 2022 that ZEE entered into an agreement with Disney Star for setting out the basis on which Star would be willing to grant sub-licence rights in relation to television broadcasting rights of the International Cricket Council’s (ICC) Men’s and Under-19 (U-19) global events for a period of four years (2024-2027) on an exclusive basis.
On the matter of the sub-licencing agreement it had enetered into with Disney Star, ZEE said: “The Company/Board had identified this acquisition of strategic importance ensuring the Company is present in all three segments of the media and entertainment business.
“The performance of the Alliance Agreement was subject to certain conditions precedent including submission of financial commitments, provision of bank guarantee and corporate guarantee and pending final ICC approval for sub-licensing to the Company.”
ZEE claimes that till date, it has accrued Rs 72.14 crore for bank guarantee commission and interest expenses for its share of bank guarantee and deposit as per the Alliance Agreement.
“During the quarter ended December 31, 2023 and subsequently, Star has sent letters to the company through its legal counsel alleging breach of the Alliance Agreement on account of non-payment of dues for the rights in relation to first instalment of the rights fee aggregating to USD 203.56 million (Rs 1693.42 crore) along with the payment of bank guarantee commission and deposit interest aggregating Rs 17 crore and financial commitments including furnishing of corporate guarantee/ confirmation as stated in the Alliance Agreement,” it said.
ZEE said that its Board continues to monitor the progress of the matter.
“Based on the available information and legal advice, the management believes that the company has strong and valid grounds to defend any claims.
“Accordingly, the Company does not expect any material adverse impact with respect to the above as in its view the contract has been repudiated and no adjustments are required to the accompanying statements,” it said.
(Exchange rate: $1m = Rs 8.308 cr)
