Zee Entertainment stock hit after $940-mn Star India demand

A googly on a legal pitch in London is threating to bowl Zee Entertainment out. The Indian TV entertainment major is facing a massive damage claim of $940 million or around Rs 8,032 crore from Star India for a failed cricket deal. Though the claim has been refuted by the company, nervousness on the street is pulling its stock down.

Zee Entertainment, led by Managing Director and CEO Punit Goenka, in a statement to stock exchanges countered the claims made by Star India which has sought damages over the terminated International Cricket Council TV rights deal. Star India Pvt Ltd had on Monday, September 16, filed a statement before the London Court of International Arbitration (LCIA).

“The arbitration is at its initial stage and the LCIA Arbitral Tribunal is yet to determine if the company is liable in any manner. The company will, on merits, strongly contest all unfounded claims by Star and reserves all its rights,” Zee Entertainment said.

Star India, had in March, initiated arbitration proceedings in London court against Zee Entertainment alleging non-compliance of terms of the sub-licencing agreement for television rights of International Cricket Council's men's events. It had earlier sent a letter to Zee Entertainment, through its legal counsel, alleging a breach of the agreement for failing to pay the first instalment of $203.56 mln, or around Rs 1,704 crore, for the ICC rights.

Zee Entertainment and Disney Star had entered into a strategic licencing agreement in August 2022, through which Disney Star was to sub-licence the television streaming rights of ICC's flagship tournaments for four years to Zee Entertainment. In April this year, Zee Entertainment had alleged that the sub-licencing agreement was repudiated because Star India breached the agreement. The Punit Goenka-led media company also sought a refund of Rs 68.54 crore that it claimed to have paid to Star India as part of the agreement.

Zee Entertainment stock is down more than 8 per cent in the past five trading days.