In a regulatory filing, Zee refuted the claims made by Star, which quantified the damages in its Statement of Case before the London Court of International Arbitration (LCIA) Arbitral Tribunal on September 16.
While refuting the Star’s claims, Zee noted that the arbitration is in 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 said in its filing.
Star is in the process of merging with Reliance Industries Limited (RIL)-owned Viacom18 to create India’s largest media and entertainment company worth $8.5 billion.
The proposed merged entity, which will be controlled by RIL, is likely to pursue the matter before LCIA once the merger becomes effective. The National Company Law Tribunal and the Competition Commission of India have already approved the merged deal.Liabilities relating to the ICC TV deal was one of the key reasons for the drop in Star’s valuation to $3 billion. Despite being the bigger of the two entities, Star was valued lower than Viacom18, which had a valuation of $4 billion. RIL will infuse $1.5 billion in the merged entity.The damages worth $940 million include costs, expenses, and applicable interest until full payment, as at 31 August, which is the proxy date of the award. Star had initiated arbitration proceedings against Zee before the LCIA on 14 March.
Star terminated its alliance agreement with Zee on June 20 while asserting that it will pursue the matter through arbitration proceedings before LCIA.
The Disney-owned company acquired the ICC TV and digital rights for a whopping $3 billion from 2024-27 and had sublicensed the TV rights to Zee under an alliance agreement on August 26, 2022.
The Punit Goenka-led company had earlier communicated to Star that the alliance agreement cannot be proceeded with since the same was subject to certain conditions precedent, including submission of financial commitments, provision of bank guarantee and corporate guarantee, and pending final ICC approval for the sub-licensing deal.
It has also sought a refund of Rs 69 crore that it has already paid to Star. The company has accrued Rs 72.14 crore towards bank guarantee commission and interest expenses for its share of bank guarantee and deposit.
Zee didn’t go ahead with the alliance agreement due to the failure of its merger deal with Sony Group’s India entities.
