Zee Entertainment pulls out of $1.4 billion cricket rights deal with Disney

According to one of the sources, Zee Entertainment failed to make the first payment of $200 million to Disney in recent weeks, signaling its inability to honor its financial obligations.

Zee Entertainment, one of India’s leading media conglomerates, has decided to abandon a lucrative $1.4 billion cricket TV rights deal with Walt Disney, according to two sources with direct knowledge of the matter. Zee Entertainment reportedly informed Disney of its intention to withdraw from the agreement, citing an inability to proceed with the payment obligations outlined in the deal.

The deal, which was initially announced in August, involved Zee Entertainment acquiring certain International Cricket Council (ICC) TV broadcast rights from Disney for four years starting in 2024. Under the terms of the agreement, Disney would retain the streaming rights while Zee Entertainment would take over the TV broadcast rights. However, Zee Entertainment has now reneged on its commitment to fulfil the financial terms of the deal, leading to its collapse.

According to one of the sources, Zee Entertainment failed to make the first payment of $200 million to Disney in recent weeks, signalling its inability to honour its financial obligations. Despite repeated attempts to seek clarification from Zee Entertainment, the company has remained silent on the matter. Similarly, Disney declined to comment on the developments.

The collapse of the planned merger between Zee Entertainment and Sony’s Indian business further compounded the situation, ultimately resulting in the termination of Zee’s TV rights deal with Disney. This latest setback adds to the mounting troubles faced by Zee Entertainment, which is grappling with a decline in advertising revenues and dwindling cash reserves.

Analysts and industry sources suggest that the failure of the Sony merger has intensified pressure on Zee Entertainment to explore new partnerships or pivot its focus towards digital entertainment to rejuvenate its business prospects. Additionally, the collapse of the Sony deal has left Zee Entertainment vulnerable to potential legal battles, exacerbating its regulatory, business, and financial challenges.

Zee Entertainment’s advertising revenues have witnessed a notable decline, dropping to $488 million for the 2022-23 fiscal year from approximately $600 million five years ago. Similarly, its cash reserves have dwindled to $86 million from $116 million over the same period, underscoring the company’s financial strain.

The abrupt termination of the cricket TV rights deal with Disney marks a significant setback for Zee Entertainment, which had sought to bolster its sports broadcasting portfolio through strategic partnerships.