Zee seeks Rs 69 crore refund from Star after ICC TV deal failure
The Punit Goenka-led company said that it has strong grounds to counter Star's claims in the matter of the ICC deal
Zee Entertainment Enterprises (ZEEL) has demanded Rs 69 crore in refund from Star after the TV rights deal for ICC failed. The refund is part of the agreement between the two, according to Zee in its Q3 financial statements.
ZEEL has said that it has communicated to Star India Pvt Ltd that it cannot proceed with the ICC TV rights agreement alleging that Star has breached the agreement and is in default of the terms.
In its financial statement for the third quarter of FY24, ZEEL said that it has also sought a refund of Rs 68.54 crore paid to Star.
“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,” said ZEEL.
On 26 August 2022, ZEEL entered into an agreement with 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 (ICC 2024-2027) on an exclusive basis, the Punit Goenka-led company 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,” it said.
ZEEL claimed 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.
ZEEL 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. Zee said that it has strong grounds to counter Star's claims in the matter of the ICC deal. As per the agreement, Zee reportedly said that it has accrued Rs 72 crore for bank guarantee commission and interest expenses for its share of bank guarantee and deposit.
