Zee Entertainment Shares Decline As Star India Seeks Rs 8,000 Crore In Damages

Shares of Zee Entertainment Enterprises Ltd. declined on Wednesday after the company said Star India Pvt. has initiated arbitration proceedings against it.

Star India has demanded Rs 8,000 crore in damages as it sought to terminate a pact between the two firms for sub-licencing of TV broadcasting rights of ICC Men's and Under-19 international matches between 2024 and 2027, it said. The pact was inked in August 2022.

The arbitration plea has been moved by Star India before the London Court of International Arbitration. The plea seeks to declare that the 2022 agreement has been "validly terminated by Star" and Zee should pay for damages worth $940 million, or around Rs 8,000 crore.

Zee "categorically refutes all claims and assertions made by Star including its claims for damages", according to an exchange filing. The arbitration is at its initial stage and the London court is yet to determine if the company is liable in any manner, it said.

Zee will "strongly contest all unfounded claims by Star", the filing said.

Earlier this year, Zee had noted that Star India has demanded Rs 1,693 crore from the company for alleged non-payment of dues related to the rights fees under their 2022 broadcast sharing pact.

Zee had then claimed that it already conveyed to Star India about its decision to not move ahead with the pact, and instead demanded a refund of Rs 68.5 crore.

While Zee is locked in the dispute with Star India, the company announced last month that it has amicably settled its dispute with Sony Pictures Networks India, arising from their failed amalgamation bid.

Zee stock dropped as much as 1.57% during the day to Rs 130.9 apiece on the NSE. It was trading 1.34% lower at Rs 131.2 apiece at 2:03 p.m., compared to a 0.29% decline in the benchmark Nifty 50.

It has plunged by 52% during the last 12 months and by 51% on a year-to-date basis. Total traded volume so far in the day stood at 0.61 times its 30-day average. The relative strength index was at 59.

Seven of the 20 analysts tracking the company have a 'buy' rating on the stock, six suggest a 'hold' and seven have a 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential downside of 51%.