Zee has cited the termination of its merger deal with Sony Group Corporation‘s India units for its decision, they told ET.
Disney Star had recently sent an intimation to Zee to honour the ICC TV deal and is now contemplating legal action against Zee, one of the sources said.
If Disney Star decides to take the legal route, it will be another setback for Zee that is already locked in a legal battle with Sony which terminated their merger deal on January 22.
Both Disney and Zee declined to comment.
ET had first reported on December 28 that there is uncertainty over the ICC TV deal since Zee had failed to submit financial commitments and guarantees to Disney Star. People close to Zee claimed that the deal was subject to the completion of its proposed merger with Sony. Disney Star officials have denied this claim.Zee sources said the company had agreed to acquire the ICC rights in the hope that the merger with Sony would go through and the Japanese media conglomerate would infuse $1.57 billion into the merged entity.Without the merger, Zee would find it difficult to service the ICC TV rights deal since it is facing pressure on its profitability due to a sluggishness in advertising and subscription revenues, media analysts tracking the sector said.
Sony units on January 22 terminated the merger deal with Zee and initiated arbitration proceedings against the Indian entertainment company before the Singapore International Arbitration Centre (SIAC), seeking $90 million in termination fees for an alleged breach of the merger agreement. Zee has denied Sony’s allegations and has said it is contesting Sony’s claims before the SIAC. The company has also approached the National Company Law Tribunal seeking directions for Sony to implement the merger agreement.
