Disney Star-ICC deal: Is a renegotiation feasible?  

Disney Star is seeking to renegotiate its substantial $3 billion media rights deal with the International Cricket Council (ICC) for the 2024-27 cycle. This comes in the wake of advertising revenue losses from the recent ICC Men’s T20 World Cup that held in the US and the West Indies. 

The tournament, meant to expand cricket’s audience, saw lower viewership in India because of inconvenient match timings and bad weather that caused disruptions. The Disney-Star ICC deal, however according to media reports, doesn’t allow a renegotiation or exit. 

Industry experts are divided on whether a renegotiation is feasible. While the existing contract lacks explicit provisions for altering its terms, industry and legal experts suggest that potential avenues for adjustment might exist under mutual consent or specific contractual mechanisms. The situation underscores the complex interplay between contract law and commercial realities in sports media rights agreements.

According to Karan Taurani, SVP, Elara Capital, whether Disney Star can officially renegotiate the contract is uncertain. He added that the value of these rights were very high. “They have been asked to pay Rs 24,000 crore for four marquee tournaments each year: two T20 World Cups, the 50-over World Cup, and the Asia Cup. Generally, only the 50-over World Cup had seen significant ad revenue and traction due to its timing and location in India, as well as India's strong performance in the tournament.”

He further said that despite this the 50-over World Cup also incurred losses. “They were unable to recover more than Rs 3,000 to Rs 3,500 crore on a cost base of Rs 6,000 crore each year for these tournaments. This indicates a potential loss of Rs 3,000 to Rs 3,500 crore annually due to these events and their inability to cover costs. Given this situation, they might want to renegotiate the terms. However, I'm not sure whether such renegotiation is officially feasible.”

It is also important to note that when Disney Star won the media rights deal with the ICC, it entered into a strategic licensing agreement with Zee Entertainment Enterprises Limited (ZEEL) for the exclusive TV rights to ICC men’s events from 2024-27. The Disney-Zee deal broke away from previous patterns by ensuring that sports media rights remained exclusive with one party, which helped the rights owner command higher advertising rates. However, this deal was later terminated by Disney Star.

Vivek Menon, Managing Partner, NV CAPITAL shared, “Given that a substantial number of matches got washed out because of the rains, that could be a huge trigger for Star India to renegotiate the contract. Let us not ignore the fact that the T20 World Cup would have been the most coveted property in the ICC as well as the Star calendar and their advertising revenue would have had a major hit because of the washout of the T20 matches.”

Another media analyst, speaking on condition of anonymity, shared, “When Disney Star won the rights, they signed a deal with ZEEL to share TV rights, aiming to maximise revenue. However, the deal was later terminated by the network. Recovering such a significant amount is not easy, and this year, the T20 World Cup faced reduced brand spending due to its timing, scheduled right after the IPL and the general elections. This led to a revenue decline. The network will need to devise a strategy to boost revenue.”

As earlier reported by exchange4media, the broadcaster hasn’t changed the ad rates this year as compared to last year. However, some key matches sold at a higher price, including the India vs Pakistan match which touched 2.9 crore peak concurrency on Disney+ Hotstar. The official broadcaster of the ICC Men’s T20 World Cup 2024 signed 19 sponsors right before the start of the tournament. This includes brands like Dream11, Maruti, Parle Products, BPCL, ICICI Bank and more. Brands like P&G, Google, Colgate, AMFI, Ultratech and Amazon have come on board as sponsors recently.  

According to Kunal Sharma, Partner, Singhania & Co, the contractual relationship between Star India and the ICC is governed by the specific terms outlined in their agreement. Without access to these contractual provisions, it is impossible to definitively determine whether Star India would have the right to renegotiate the terms of the contract following significant losses in advertising revenue during the recent T20 World Cup.

However, if the contract includes a renegotiation clause or covenant that allows Star India to compel the ICC to renegotiate the terms in the event of substantial losses, then Star India may have grounds to request a renegotiation. 

“Change is inevitable, and the field of contract law is not far removed from this principle. Contracts are designed to govern the legal relationship between parties within the existing regulatory framework. Parties enter into agreements based on the prevailing laws and applicable regulations. However, it is not always possible to foresee, contemplate, or predict changes after entering into an agreement,” said Sharma. 

He further added, “Such changes can significantly impact a contract, potentially making it unfair to insist on performance under the new circumstances. To address unforeseen changes, contracts often include clauses for modification, renegotiation, or material adverse changes, especially in long-term agreements like infrastructure projects. These clauses allow for adjustments if conditions become commercially unviable. Without such provisions, a contract might be considered frustrated. Therefore, the feasibility of Star India’s request to renegotiate its ICC media rights deal depends on the specific terms and presence of renegotiation clauses in their contract.”

As per reported by e4m, the contract does not contain explicit provisions for either exit or renegotiation. However, the absence of such clauses does not necessarily preclude the possibility of renegotiation, said Suhael Buttan, Counsel, SKV Law Offices.

He added that if the contract permits termination by mutual consent, both parties—provided the ICC is open to renegotiation—could potentially enter into a new agreement. Section 62 of the Indian Contract Act allows parties to modify, alter, or rescind a contract through mutual agreement. There are several legal precedents supporting the alteration of contracts when both parties consent to the change.

He said, “However, if mutual consent is not reached, other factors like how the contract addresses force majeure events, changes in circumstances, or the doctrine of frustration will become critical. These clauses could play a significant role if Star India seeks to invoke them to justify a renegotiation. In the absence of mutual consent, any attempt to alter the terms would likely lead to a dispute resolution process.”