On August 26, 2022, Star had entered into an alliance agreement with Zee to sublicense ICC TV rights for Men’s and Under-19 (U-19) global events for a period of four years till 2027.
Zee didn’t go ahead with the alliance agreement due to the failure of its merger deal with Sony Pictures Networks India. As a standalone entity, Zee would have found it challenging to service the ICC TV rights deal.
The company has communicated to Star that the alliance agreement cannot be proceeded with and has also sought a refund of Rs 69 crore that it has already paid.
According to Zee, 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 the sub-licensing deal.Zee has accrued Rs 72.14 crore towards bank guarantee commission and interest expenses for its share of bank guarantee and deposit, as per the alliance agreement.Earlier, Star had sent letters to Zee through its legal counsel alleging breach of the alliance agreement on account of non-payment of dues for the rights in relation to the first installment of the rights fee aggregating to $203.56 million, along with the payment for bank guarantee commission and deposit interest aggregating Rs 17 crore, and financial commitments including furnishing of corporate guarantee.
Zee has countered Star by stating that the latter has not acted in accordance with the alliance agreement and has failed to obtain necessary approvals and execute necessary documentation and agreements.
The company also added that Star, by its conduct, has breached the Alliance agreement and is in default of the terms thereof, and consequently, the contract stands repudiated.
Based on the available information and legal advice, Zee believes it has strong and valid grounds to defend any claims and 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 Statement.
