STAR TV CONSIDERS WINDING UP DISTRIBUTION

A major restructuring exercise is being contemplated within Star TV. For starters, a proposal is doing the rounds of Star TV's headquarters in Hong Kong: exit from distribution and marketing (D&M) completely and hand it over to another company.

The Star TV management's desire to exit from direct involvement in D&M emanates from the fact that it will reduce expenditure on personnel and also the exposure to market risks.

But the "revolutionary" proposal, according to high level sources in Star Hong Kong, has safety clauses too. Star exits from D&M and the responsibility is entrusted to ESPN-Star Sports, a joint venture company, which looks after the business interests, including distribution, of ESPN and Star Sports in Asia. Currently, however, the distribution of ESPN is looked after by the Modi Entertainment Network.

What in effect the proposal means is that, the sources said, in Asia, the D&M of the Star channel bouquet, including National Geographic (in which News Corp has picked up about 50 per cent stake through Fox), and CNBC will be distributed in India by ESPN-Star Sports. ESPN-Star Sports has been relatively successful in the manner it has distributed Star Sports within India, its main market. Subscription fee collections from Star Sports by ESPN-Star Sports have been higher than what MEN has been able to collect from cable operators for ESPN.

The transfer of the D&M will have one major benefit: Star can lop off some of its existing D&M staff in places like India considerably, thus helping it in reducing overhead. This apart, packaging ESPN-Star Sports, along with other Star TV channels such as Star Plus, Star News, Star Movies, Star World, Channel V will give the management tremendous clout with the cable TV trade. Errant Indian cable operators, who in the absence of addressability, have been loathe to pay subscription charges for the Star TV entertainment channels will be forced toe the line if these are included in a channel bundle which includes ESPN and Star Sports. With the Indian advertising market not picking up as much as expected, Star has been seeking to reduce its losses from its Indian operations through the subscription route. But India cable operators have been putting up stiff resistance, taking advantage of the fact that there are no pay TV regulations in India as yet.

However, the ESPN-Star Sports proposal, though in its conceptual stage currently, has met with stiff resistance within Star TV India, Star sources said. And there is no surety if it will be implemented finally.

"The same way as a letter to Urmila Gupta, executive director (DTH-India), from Star's chief executive Gary Davey has upset people in the India office," the sources said.

The sources added that Davey's letter to Gupta and also, probably, to Shukla Das, the programming head, states clearly that the direct to home television (DTH) division in India is up for "reveiw". Reason: unlikely activity in the sector in the near future considering that the Indian government is in no mood to take controversial decisions, like removing the ban on equipment capable of receiving TV signals over 4800 MHz , before the general elections.