New Delhi: Star India Pvt. Ltd, the News Corp. subsidiary that operates India’s leading general entertainment channel Star Plus, and Balaji Telefilms Ltd, the content provider responsible for some of the most successful soaps on Indian television, seem to be on the verge of a split after sharing an eight-year relationship.
Star is mulling divesting, partially or fully, its 25.9% equity stake in the country’s largest television content production company, said a person close to the development who didn’t wish to be identified because of the sensitivity of the issue. “Of late, the exclusivity agreement has been creating a strain between the two partners as Star wants to try out new ideas and producers and Balaji now has many more buyers with a slew of GECs (general entertainment channels) launching,” the person said. The exclusivity agreement refers to the condition put by Star that no Balaji show will run on any other channel during the time slots on which Star had a Balaji serial running. Star, according to insiders in both firms, pays Balaji a premium of more than 200% above market rates for this exclusivity.
Repeated efforts to speak with Star executives on the issue elicited no response. Balaji chairman Jeetendra Kapoor, however, indicated all was not well between the partners. “We want to move on and they also want to do their thing, but nothing has happened so far. I will be able to give a clearer picture in another 15 days,” Kapoor, a popular Hindi film actor of yesteryears, said.
Moving on: Balaji chairman Jeetendra Kapoor indicated that all was not well between the partners. ( Girish Srivastava / Hindustan Times)
According to an analyst at a Mumbai-based equity brokerage who asked not to be named, film production and distribution company Eros International Ltd and Reliance Entertainment Ltd, owned by the Reliance-Anil Dhirubhai Ambani Group, are in the race to buy Star’s stake in Balaji. Eros chairman Kishore Lulla was not available to comment and Reliance Entertainment chief executive officer Rajesh Sawhney declined to speak on the issue.
Kapoor, however, said, “If they want to sell, they will sell it to us only.” According to Balaji’s chief financial officer Sandeep Jain, Balaji has the first right of refusal if Star wants to sell out.
In 2004, Star India’s Hong Kong-based parent Star Group Ltd, through Dubai-based affiliate Asian Broadcasting FZ-Llc., bought a 21% stake in Balaji from the promoters for Rs123 crore. This was followed by an open offer, subsequent to which its shareholding went up to 25.9%. This holding was worth Rs324.4 crore based on Balaji’s stock price of Rs191.40 on the Bombay Stock Exchange Friday.
Differences have dogged the relationship between Star India and Balaji for a while now. A joint venture that was set up to launch regional entertainment channels failed to take off and the two blamed each other for the delay. Mint had reported this development on 14 March. The venture, 51% owned by Star Group and 49% by Balaji, was expected to launch its first channel, a Telugu one, in the last quarter of 2007, followed by channels in Kannada, Malayalam and other key regional languages over a period of two-three years. Vijay TV, Star’s channel in Tamil, was brought under this joint venture.
Star and Balaji go back to 2000 when Star Plus, which hitherto largely had English content, launched programming in Hindi. While it was the stupendous success of Kaun Banega Crorepati that pushed Star Plus to the leadership position in the general entertainment space, the popularity of Balaji soaps such as Kyunki Saas Bhi Kabhi Bahu Thi and Kahaani Ghar Ghar Ki, kept it glued to the top slot.
The two serials have been running since 2000. Besides being the longest running soaps on Indian television, the two shows have also been among the top five most watched serials on cable and satellite television. Kyunki Saas, according to data from television audience research firm TAM Media Research, was the most watched serial till 2005. It still occupies the number two slot.
While Star executives have always maintained that Balaji’s soaps owe their success to Star Plus’ leadership position, Balaji executives have argued to the contrary. Yet, the relationship between the two partners had been going strong till recently.
Balaji currently has six soaps running on Star Plus and according to Balaji’s Jain, about 70% of his firm’s revenues come from Star.
Balaji also produces shows for Zee (Kasamh Se), Sony (Khwaish and Kuch Is Tarah) as well as 9X (Kya Dil Me Hai? and Kahe Naa Kahe).