Zee and Disney+hotstar. (Photo Source: X(Twitter)
Zee Entertainment Enterprises Limited faced a major setback in its cricketing pursuits as it missed a crucial $200 million payment to Walt Disney Co.’s India unit for the television rights of cricket matches. Sources familiar with the matter revealed that Zee cited a cash crunch as the reason for skipping the installment due in early January, leaving Disney seeking clarification on the matter.
This skipped payment forms part of the hefty $1.4 billion Zee committed to pay under the license agreement inked in August 2022, pertaining to the TV rights for International Cricket Council men’s matches in India until 2027. The Mumbai-based media giant, however, failed to provide the bank guarantees required for this payment, raising concerns about potential legal disputes.
This blunder arrives amid Zee’s ongoing struggle with the imminent collapse of its colossal merger with Sony Group Corp. Bloomberg News previously reported Sony’s intent to issue a deal termination notice to Zee, while the latter maintained its stance on continuing efforts toward finalizing the merger. The impact of this default extends beyond financial troubles, posing uncertainties regarding potential legal entanglements for Zee. The failure to honour the payment deadline could trigger legal ramifications, adding to the company’s existing challenges amidst the impending merger fallout.
Zee Entertainment shares drop drastically
The significance of these TV rights cannot be overstated, especially in a cricket-crazed nation like India with a population exceeding 1.4 billion. Zee Entertainment pinned its hopes on these rights to bolster its viewership and attract more advertisers, making this default a significant blow to its strategic plans.
The repercussions of this missed payment were felt strongly in the stock market, as Zee’s shares plummeted by as much as 14% before slightly recovering. As of the latest update, the company’s shares were trading 7.7% lower in Mumbai, contrasting with the upward movement of the benchmark S&P BSE Sensex.