Zee seeks Rs 68.54 crore fefund from Star India over alleged contract violation

Zee Entertainment Enterprises has alleged that Star India has not acted in accordance with the agreement between them over the sharing of the TV broadcast rights of ICC cricket matches and has sought a refund of ₹68.54 crore from the Walt Disney-owned firm.

In August 2022, Zee Entertainment Enterprises entered into an alliance agreement with Star India for a sub-license of TV broadcasting rights of ICC Men’s and Under 19 international matches from 2024 to 2027.

Star India has “failed to obtain necessary approvals, execution of necessary documentation and agreement” and believes that it has “by its conduct breached” the agreement, Zee Entertainment Enterprises Ltd (ZEEL) said in the financial statement of its latest December quarter results last week.

The alliance agreement was subject to certain conditions such as submission of financial commitment, provision of bank guarantee and ICC approval for sub-licensing from the International Cricket Council (ICC).

“Till date, the company has accrued ₹72.14 crore for bank guarantee commission and interest expenses for its share of bank guarantee and deposit as per the Alliance Agreement,” ZEEL said.

During the quarter ended December 31, 2023, and subsequently, Star has sent letters to ZEEL through its legal counsel alleging breach of the alliance agreement on account of non-payment of dues for the rights in relation to first installment of the rights fee aggregating to $203.56 million (₹1,693.42 crore).

“Along with this, Star India also sought ₹17 crore for payment for bank guarantee commission and deposit interest,” ZEEL added.

“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,” said ZEEL.

The management also believes that Star by its conduct has “breached the Alliance Agreement and is in default of the terms thereof and consequently, the contract stands repudiated,” it added.

ZEEL has already communicated to Star that the alliance agreement cannot proceed and sought a refund of ₹68.54 crore paid to it.

“The board continues to monitor the progress of aforesaid matters. Based on the available information and legal advice, the management believes that the company has strong and valid grounds to defend any claims,” it said.

Disney Star bagged the broadcast rights of all ICC events for four years from 2024 to 2027 for the country’s 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.

Last month, Sony Corp terminated the agreement with ZEEL for the merger of its Indian entertainment business with it. Besides, Sony had also initiated appropriate legal actions to contest the claims of $90 million (₹748.5 crore) filed by Sony Group before the Singapore International Arbitration Centre (SIAC).

ZEEL had also filed a petition before the National Company Law Tribunal (NCLT), seeking a direction to Sony Group to implement the merger scheme.

ZEEL, in the financial statement, also said that it spent nearly ₹427 crore for the merger. It has spent ₹60.34 crore on its proposed merger Culver Max (formerly Sony Picture India) and BEPL (Bangla Entertainment Pvt Ltd).

Overall ₹250.73 crore were spent on the merger in the nine months of FY24. It had spent ₹176.20 crore in FY23 for the deal announced in December 2021. The Hindu Business line