Star India terminates ICC sub-licensing arrangement with ZEE, seeks damages

Star India has ended its exclusive agreement with Zee Entertainment Enterprises Ltd (ZEE). The Walt Disney Company-owned network had sub-licensed the linear TV rights for the ICC Men’s tournaments to ZEE for the 2024-27 cycle, a partnership that has now been dissolved due to allegations of contractual breaches.

ZEE on Wednesday said that Star India terminated the agreement on 20 June, citing a breach of contract. The original agreement, signed on 26 August 2022, had positioned ZEE as a key player in broadcasting major ICC events, including the ICC Men’s T20 World Cups and the ICC Men’s Cricket World Cup.

The termination follows Star India's arbitration proceedings initiated in March, where the company sought either specific performance of the agreement by ZEE or compensation for unquantified damages. 

ZEE has disclosed that Star India is now pursuing damages in the ongoing arbitration process, which are yet to be quantified.

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“During the previous year, Star had sent letters (to ZEE) alleging breach of the Alliance Agreement due to non-payment of dues for the rights fee's first instalment, aggregating to $203.56 million ( ₹1,693.42 crore), along with the payment for bank guarantee commission and deposit interest aggregating ₹17 crore, and financial commitments, including furnishing of corporate guarantee/confirmation as stated in the agreement,” ZEE said in its disclosure.

“Based on legal advice, the management believes that Star has not acted in accordance with the Alliance Agreement and has failed to obtain necessary approvals and execute necessary documentation and agreements," the company added.

ZEE has also contended that Star India's actions amount to a repudiation of the contract. The company has accrued ₹72.14 crore towards bank guarantee commission and interest expenses and has requested a refund of ₹68.54 crore from Star India.

In August 2022, Star India won the media rights of the ICC tournaments for the 2024-2027 cycle for $3.03 billion. It later sub-licensed the linear TV rights to ZEE, a rival network.

The initial deal was a strategic move for ZEE, marking its return to the sports broadcasting sector after selling its Ten Sports network to Sony Pictures Networks India. However, the sub-licensing agreement’s execution depended on fulfilling several conditions, including financial commitments, bank guarantees, corporate guarantees, and obtaining final approval from the ICC, ZEE said in its disclosure.

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According to people familiar with the matter, ZEE’s ability to meet these commitments was contingent on its now-terminated merger with Sony, which would have provided over $1.5 billion in funding. Without this financial support, ZEE struggled to fulfill its obligations under the agreement.

ZEE's management maintains, based on legal advice, that Star India failed to meet its obligations, including securing necessary approvals and completing required documentation, thereby breaching the agreement. 

The board of ZEE continues to monitor the situation, asserting that the company has strong grounds to defend itself in the arbitration process. They do not foresee any significant adverse impact from this dispute and have not made any adjustments to their financial statements.

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The now-terminated deal would have granted ZEE exclusive television rights to major ICC men’s events, including two ICC Men’s T20 World Cups (2024, 2026), the ICC Men’s Champions Trophy (2025), and the ICC Men’s Cricket World Cup (2027), as well as key ICC U-19 events.