DTH

For its DTH venture, Star zeroes down on Tata

NEW DELHI: Having managed to sew up a suitable deal and partner for Star News, the Rupert Murdoch's pan-Asian media venture Star Group Ltd has now focussed on its Ku-band direct-to-home (DTH) television venture in India - and according to information available, the Indian partner would comprise the Tata Group.

The deal is expected to be formally inked soon, though most of the background work necessary for such a big joint venture is understood to have been completed, including a due diligence of the proposed project by the Tatas through Ernst & Young.

The Indian DTH project has been estimated to cost between $250-$300 million and would be modelled on Murdoch's BSkyB in the UK, a highly successful pay-per-view platform. The Tatas initially would hold 80 per cent equity stake, while the rest would be held through an entity that may have investments from News Corp's other companies too, apart from Star.

Later, the majority stakeholder may dilute some of its stake to accommodate foreign financial institutions (FIIs).

As per current guidelines, Star cannot hold more than 20 per cent stake in a DTH venture where the total foreign investment, including FIIs/NRIs/OCBs, has been capped at 49 per cent by our government.

The DTH venture would be a 100-channel platform to start off with and the one-time cost that a consumer would incur on the hardware, including the dish antennae, would be in the region of Rs 5,000. The monthly subscription fee, according to projections, is being attempted to be kept low between Rs 400 and Rs 500. The initial subscriber target is one million.

Interestingly, the government has confirmed the development. A government official today said that it has been conveyed to them that Star is interested in restructuring its proposed DTH venture. "It has been conveyed to us unofficially, though, that the majority Indian partner for the DTH venture would be the Tatas," the official added.

Earlier, Space TV had applied for a DTH licence wherein the shareholders and board of directors were employees of Star India. Though the government had raised several questions on the structuring of the DTH company, the information and broadcasting ministry had given a conditional letter of invitation to Space TV to comply with other formalities, earlier this year.

This move of the government has been criticised in and outside the Parliament too.

However, when indiantelevision.com contacted Star India this evening on the proposed DTH venture, the company refused to make any comments. "We are not in a position to say anything at this moment," said Star India's Jagdish 

Kumar, tipped to be the chief operating officer (COO) for the joint venture DTH company. He is incharge of the DTH division in India, apart from being a director on the Space TV board.

When indiantelevision.com spoke to the Tata Groups' corporate communications agency Vaishnavi, the response was that, "The Group did not wish to comment on this matter."

Considering that a Subhash Chandra company, ASC Enterprises, has already signed the formal DTH licence agreement with the government and is set to launch its services from the first week of October, Murdoch and his 

companies cannot afford to sit idle.

The Tatas, who also control India's long distance telecom carrier Videsh Sanchar Nigam Ltd (VSNL), are slated to pick up 80 per cent stake in the joint venture that may be renamed to facilitate carrying the Tata brand name.

As per a presentation made to our government, the debt-equity ratio of the DTH venture is likely to be 1:1, which may change a little when the project actually gets off the ground. The paid-up capital of the DTH joint venture would be approximately Rs 8 billion.

As and when Murdoch manages to get the Tatas on board for the DTH venture, he would have effectively silenced many a critic, especially those in the Indian media companies.

The Tata Group is conglomerate with business interests spread across a variety of segments, including automobiles, information technology, hospitality industry and telecom.

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