Star India, a subsidiary of Disney, initiates arbitration proceedings against Zee Entertainment

On Wednesday, Zee Entertainment Enterprises announced that Star India, a subsidiary of Walt Disney, has commenced arbitration proceedings against the broadcaster. The dispute stems from an alleged violation of the terms laid out in a cricket broadcasting contract between the two entities.

This development comes after the termination of the Zee-Sony deal. Zee chose to end the agreement for broadcasting ICC men’s and under-19 tournaments, a pact originally signed in 2022.

In an exchange filing, Zee Entertainment stated, "We hereby notify you that on March 14, 2024, Star India Private Limited ('Star') initiated arbitration proceedings against the Company. This action is pursuant to the alliance agreement dated August 26, 2022, between Star and our company, through the submission of a request for arbitration."

After Zee's announcement, the stock experienced a decline of over 3.47 percent during Friday's trading session. Zee Entertainment shares concluded at ₹141.80 on March 15, down from the previous day's close of ₹146.90.

As per Star India's claim, submitted under the Arbitration Rules of the London Court of International Arbitration, Zee is allegedly breaching the terms outlined in the agreement dated August 26, 2022.

Conversely, Zee argues that Star India breached the agreement and has therefore lodged a claim for 685.4 million rupees ($8.3 million), as disclosed during the announcement of its quarterly results on February 13th.

Zee further stated, "Based on our preliminary assessment of the Application and legal counsel's advice, we disagree with Star's assertions and will respond accordingly. We will file appropriate responses, counterclaims, and take necessary actions."

The recent alliance involving Zee has soured after Sony's India unit withdrew from a proposed $10 billion merger with the broadcaster. The withdrawal cited various points of contention, including the cricket TV rights deal.

According to a Reuters report, Zee's efforts to secure debt for the deal, which Sony alleged was undertaken "without prior written consent," exceeded the total debt threshold specified in the merger agreement.

Despite the collapse of the Zee-Sony merger, Disney and Reliance have recently unveiled a merger plan, aiming to create an $8.5 billion media powerhouse in the country.