In a possible fallout of the collapsed Sony deal, Zee Entertainment Enterprises Ltd has reportedly backed out from a $1.4 billion licensing agreement with Disney Star for the broadcast of certain cricket events.

A Reuters report on Thursday said Zee has conveyed to Walt Disney it does not intend to go ahead with the deal since it is not in a position to pay for the rights. There were no official comments from Zee at the time of going to press.

Zee in August said it has entered into a strategic licensing agreement following which Disney Star will license the television broadcasting rights of the International Cricket Council’s (ICC) Men’s and Under 19 (U-19) global events for four years.

According to the terms of the deal, Disney Star will continue to be the exclusive home for the streaming of all ICC tournaments through its digital platform — Disney+ Hotstar.

While the homegrown media and entertainment firm was supposed to pay for the rights over a period of time, it had reportedly missed the first payment of $200 million to Disney recently.

With Zee backing out, Disney could likely challenge the decision in the courts.

On the other hand, Zee is understood to be maintaining the agreement with Disney was dependent on the failed merger with Sony.

After rebounding on Wednesday, the shares of Zee ended in negative territory on Thursday. It settled at Rs 163.25, a drop of 1.86 per cent over the last close.

According to a Motilal Oswal report, Zee’s performance has been abysmal
for the last four years as ad revenue declined 14 per cent from 2019-20 to 2022-23 because of weak market conditions.

"At a time the industry is seeing a shift toward OTT, Zee5 individually would be on a weak footing, playing the second fiddle in a market dominated by strong players such as Disney, Netflix, Amazon Prime, and Reliance Industries-led Network18,” the brokerage said.

“This is unlike the linear TV market, in which it has maintained its position among the top two players for a prolonged period’’, the brokerage added.