Zee Entertainment Enterprises responded to recent speculation about Star India Private Limited's potential legal action against the company for allegedly withdrawing from a $1.4 billion deal. In a statement, Zee mentioned that it is not aware of Star India Private Limited's intentions or future steps regarding the strategic license agreement between the two entities.
The company expressed its inability to comment on the news item, stating that it seems to pertain to internal discussions or plans within Disney Star, which Zee is not privy to. This response comes in light of Zee Entertainment Enterprises being asked to clarify its position on the news suggesting possible legal action by Disney Star.
Analysts from Elara Securities anticipate potential repercussions for Zee, including penalties and legal proceedings, arising from its ongoing dispute with Sony over the non-compete fee. Additionally, Zee faces legal challenges from various creditors of the Essel group, such as Axis Finance and IDBI Bank, related to the alleged dishonoring of contracts with Disney.
Zee had previously entered into a contract with Disney for the sub-franchise of sports rights, specifically for ICC tournaments on linear TV. An earlier report from Elara Securities estimated annual losses of Rs 15.2 billion in FY25E and beyond for Zee, citing factors such as high content costs, lower sports ad revenue, and the availability of cricket content for free on OTT platforms.
Given the current financial situation of Zee, with a cash balance of only Rs 6 billion compared to a potential contractual obligation of Rs 40 billion per year, it is suggested that Zee may struggle to fulfill this commitment. The initial agreement was made in the context of the strategic-synergistic contiguity with the Zee-Sony merger, which may now be in question. The unfolding situation highlights the complexities and potential challenges faced by Zee Entertainment Enterprises in its contractual relationships and business strategies.
(With Agency Inputs)
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