Zee Entertainment Enterprises Ltd. cited a cash crunch as it missed a deadline to pay $200 million to Walt Disney’s India unit for TV rights of cricket matches. Disney has sought an explanation from Zee regarding the skipped payment, which was part of the over $1.4 billion agreed upon for the license agreement signed in August 2022. People familiar with the matter revealed that Zee’s failure to make the payment is occurring as the company attempts to preserve cash ahead of a potential collapse of its mega-merger with Sony Group Corp.
Zee Defaults on Payment to Disney Amid Merger Failure
Zee Entertainment Enterprises Ltd., based in Mumbai, failed to pay the instalment due in early January, citing a cash crunch, according to unnamed sources. Disney has requested an explanation from Zee regarding the skipped payment, which was part of the over $1.4 billion agreed upon for the license agreement signed in August 2022.
Defaulting on the payment to the Disney unit adds legal complications for Zee, already grappling with the aftermath of a collapsing merger with the Sony Group. Notably, Zee has not provided bank guarantees for the contracted sum, as per information from one of the sources. Spokespersons for Zee and Disney have yet to respond to requests for comment.
On Monday, Bloomberg News reported that Sony is preparing to send a deal termination notice to Zee. Despite this, Zee stated on Tuesday that it is actively working toward finalizing the merger.
TV Rights for ICC Men’s Cricket
On Sunday, Nov. 19, 2023, spectators actively reacted while watching the ICC Men’s Cricket World Cup 2023 final match between India and Australia on a digital device at a store in Old Delhi, India. In August 2022, Disney Star and Zee entered a pact, granting exclusive TV rights for International Cricket Council men’s matches in India until 2027. An exchange filing at that time confirmed that Disney’s streaming platform in the country retained digital rights for the property.
The Indian entertainment company bet on TV rights to maintain its viewership and draw more advertisers in the cricket-crazy nation of more than 1.4 billion people. Zee’s shares dropped as much as 14% on Tuesday before partially recovering. At 2:35 pm in Mumbai, it was trading 7.7% lower, while the benchmark S&P BSE Sensex had advanced.