The anticipated $1.5 billion International Cricket Council (ICC) TV rights deal between Disney Star and Zee Entertainment Enterprises is in jeopardy as the new media rights cycle is set to commence next month.
Sources revealed to Economic Times that the ICC TV deal, announced in August 2022, remains unresolved as Zee has yet to furnish the necessary bank guarantees to Disney Star.
Zee’s FY23 annual report states that the acquisition of ICC TV rights is “subject to certain conditions precedent, including submitting financial commitments, guarantees, and ICC approval for sub-licensing to the firm, which are pending.”
The unresolved status of the ICC TV deal becomes a focal point during due diligence and valuation discussions between Walt Disney and Reliance Industries (RIL) concerning the potential merger of Star India and Viacom18.
The upcoming ICC Under-19 Men’s Cricket World Cup 2024, scheduled in South Africa from January 19 to February 11, will mark the initiation of the new media rights cycle. Disney Star secured the ICC TV and digital rights for India from 2024 to 2027 for $3 billion and sub-licensed the TV rights for men’s and Under-19 global events to Zee while retaining the digital rights.
Disney Star and Zee in hot waters regarding ICC deal
Notably, Disney Star winning bid of $3 billion surpassed Sony Pictures Networks India (SPNI) and Viacom18, who reportedly offered $1.3-1.4 billion for the ICC’s TV and digital rights. Both Disney Star and Zee declined to comment on the ongoing matter.
Should the ICC TV rights deal falter, Disney Star, the contracting party with the ICC, will be obligated to fulfill the entire $3 billion sports rights commitment over the next four years. Analysts predict a potential drop in Disney Star’s valuation due to expected losses from sports investments, including ICC and Indian Premier League (IPL) TV rights, amounting to a combined $6 billion.
According to legal experts, if Zee fails to honor its ICC TV sub-licensing agreement with Disney Star, the latter may explore legal recourse. The ongoing priority for Zee is to salvage the merger deal with Sony Pictures Networks India (SPNI).
A top media executive highlighted the challenges for Zee, noting that without the merger, servicing the $1.5 billion ICC TV deal would be difficult given the existing profitability stress. The expectation was that Zee’s merger with Sony would proceed, with the latter investing $1.5 billion in growth capital in the merged entity.
Zee’s net profit in H1 FY24 contracted by 67% to Rs 141 crore, primarily due to macroeconomic challenges affecting revenue and escalating costs from content and marketing investments. Meanwhile, Disney Star’s sports division reported an 82% increase in operating losses to $432 million for the 12 months ended September, with a 39% revenue decline to $729 million.
Sports broadcasting has historically incurred losses in India, although it plays a crucial role in driving subscription revenue and attracting significant sponsorship funds, as noted by a former CEO of a prominent sports network.
Editors pick
