Arbitration case: Zee to contest ₹8,000 crore claims by Star India

Refuting claims made by Star India in an ongoing arbitration case, including $940 million or ₹8,000 crore in damages, Zee Entertainment Ltd said today that it will strongly contest all "unfounded claims" by Star.

Star India Private Ltd (Star) had initiated arbitration proceedings against ZEE under the alliance agreement signed on August 26, 2022. The request for arbitration under the Arbitration Rules of the London Court of International Arbitration (LCIA) was filed on March 14, 2024.

On September 16, 2024, Star filed its statement in the case before the LCIA Arbitral Tribunal, says Zee. "It (Star) has sought to declare the Alliance Agreement has been validly terminated by Star and damages to be determined as of 31 August 2024 as proxy date of the award at US$940 million, along with costs, expenses and applicable interest until full payment," Zee says in an exchange statement.

Rejecting claims and assertions by Star, including its claims for damages, Zee says the arbitration is at its initial stage and the LCIA Arbitral Tribunal is yet to determine if it is liable in any manner. "The company will, on merits, strongly contest all unfounded claims by Star."

Amid the development, shares of Zee were trading 0.68% down at ₹132 on the BSE at 12.53 pm on Wednesday, about 56% down from its 52-week high of ₹299.50 hit on December 12, 2023.

On March 14, 2024, Star India, while initiating arbitration proceedings against Zee, had said it was in non-compliance with the terms of the alliance agreement signed on 26 August 2022. The pact was executed to set out the basis on which Star would be willing to grant the sub-license rights for the ICC men’s cricket events from 2024 to 2027. "Star has sought specific performance of the Alliance Agreement (or alternatively, to pay damages, which are yet to be determined)."

In Q1 FY25, ZEE’s overall ad revenue was down 17.9% QoQ and 3.1% YoY to ₹910 crore. Domestic ad revenues were down 18.5% QoQ and 3.6% YoY to ₹870 crore, impacted by cricket and India’s general elections. Its subscription revenue was up 4% QoQ and 8.8% YoY to ₹990 crore. EBITDA was ₹270 crore (up 29.2% QoQ/ 75.3% YoY), while EBITDA margin was 12.8% (up 306 bps QoQ and up 490 bps YoY). ZEE's consolidated profit was ₹130 crore. Zee5 revenue surged 15% YoY to ₹220 crore as EBITDA loss reduced to ₹180 crore.