Disney demands damages from Indian Sea over botched cricket deal
Disney India (formerly Disney Star) is seeking $940 million in damages from Indian media conglomerate Zee Entertainment Enterprises Limited, it was revealed on Wednesday. The claim relates to a cricket rights deal that collapsed in January this year.
After Disney won a bid for TV and digital rights to men’s and women’s cricket events in 2022, conducted through the International Cricket Council, and spanning the four years 2024-2027, the television broadcast rights for ICC men’s and under the 19 quickly sublicensed. to ZEEL for a fee of $1.4 billion.
However, since January it has become clear that the deal would not go ahead. Reuters reported at the time that ZEEL had missed the $200 million first phase payment and did not have the resources to continue.
The companies have since commenced arbitration with the London Court of International Arbitration. According to a regulatory filing from ZEEL, Disney has claimed that the agreement has now been validly terminated and that Disney is owed $940 million in damages, plus costs, expenses and interest.
ZEEL’s filing responded by saying that it “categorically refutes all of Star’s claims and allegations, including its claims for damages. The arbitration is in its early stages and the LCIA arbitration tribunal has yet to determine whether the company is liable in any way. [ZEEL] will, on its merits, vigorously contest all of Star’s baseless claims and reserves all its rights.”
The case follows another corporate battle involving ZEEL.
ZEEL and Sony recently settled their dispute, which was also subject to arbitration. After more than two years of negotiations, a deal to merge ZEEL and Sony India, creating a $10 billion film, TV and streaming group, fell apart. Sony accused ZEEL of failing to meet the terms of the merger and walked away in January.
Since then, ZEEL has cut its workforce and tried to blame corruption within India’s stock market regulator, SEBI, for the failure of the Sony merger. In 2023, SEBI launched an investigation into insider trading at ZEEL and accused ZEEL’s MD and CEO Punit Goenka of “siphoning” company funds. The Securities and Appellate Tribunal later dismissed SEBI’s order banning Goenka and chairman emeritus Subhash Chandra from holding any corporate position.
Although ZEEL has remained negative over the past four quarters, profitability is low compared to previous years. The stock price of INR 132 is down 65% from December 2021, when the Sony deal was first agreed. At the current price, ZEEL is valued at a low INR126 billion ($1.5 billion).
In addition, Disney has in recent months agreed to the sale of its Indian operations to Reliance Industries Limited, which controls Viacom18 and streamer Jio. The combination of these two major companies was expected to create a dominant force in the digital and TV representation of cricket, the national sport. But regulatory approval appears to be moving at a rapid pace.
