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Business News/ Companies / News Corp. to buy ESPN stake in joint venture
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News Corp. to buy ESPN stake in joint venture

News Corp. to buy ESPN stake in joint venture

Role change: Manu Sawhney, managing director of ESPN Star Sports, will step down effective September. Photo: Ramesh Pathania/MintPremium

Role change: Manu Sawhney, managing director of ESPN Star Sports, will step down effective September. Photo: Ramesh Pathania/Mint

Mumbai: Rupert Murdoch’s News Corp. is buying out ESPN Inc.’s 50% stake in ESPN Star Sports (ESS), its joint venture in Asia with The Walt Disney Co., for an undisclosed sum, ending a 16-year partnership.

Manu Sawhney, managing director of ESPN Star Sports, based in Singapore, will step down effective September, News Corp. and ESPN said on Wednesday, announcing the transaction. He will be replaced by Peter Hutton, senior vice-president of sports for Fox International Channels, a News Corp. subsidiary.

News Corp. owns the Star brand and Walt Disney is the majority owner of ESPN Inc.

Role change: Manu Sawhney, managing director of ESPN Star Sports, will step down effective September. Photo: Ramesh Pathania/Mint

The deal will allow News Corp. to own and operate all of ESPN Star Sports’ businesses in Asia—ESPN, Star Sports, Star Cricket and ESPN HD and Star Cricket HD. News Corp. didn’t reveal how the channels will be rebranded post the transaction.

“We consider sports to be an important quotient in the entire entertainment space, and this is just an extension of our belief. Post News Corp.’s stake buy, the board will decide how the brand change will pan-out," said Uday Shankar, chief executive, Star India Pvt. Ltd.

The transaction is subject to customary regulatory approvals and ESPN Star Sports will continue to be jointly managed by the two companies until the deal is closed, he added.

News Corp. will likely pay $400-500 million (Rs 2,220-2,775 crore) for the stake, which would value ESPN Star Sports at nearly $1 billion, three media experts estimated, declining to be identified. Mint couldn’t independently verify this.

“After 16 years jointly managing ESS, we have decided to independently pursue future opportunities in Asia...With the growing digital landscape in Asia, we look forward to continuing to serve Asian sports fans through ESPN-branded digital businesses like ESPNCricinfo...ESPNFC and ESPN Mobile," said John Skipper, president of ESPN and co-chairman, Disney Media Networks. The three digital businesses are not a part of ESPN Star Sports.

Media executives said the stake buy will give Star India an edge in packaging its channels for digital subscribers, where revenues are estimated to grow sharply owing to a mandatory shift to a digital addressable system.

“Complete control over the ESS entity will substantially grow Star Network’s revenues through advertising and subscription. To add to it the company now has two big-ticket properties—ICC (International Cricket Council) and BCCI (Board of Control for Cricket in India), which makes its sports channels most desired by audiences," said Ashish Pherwani, associate director at consultancy firm Ernst and Young.

Media experts estimate the Indian sub-continent contributed almost 900 crore to ESPN Star Sport’s revenue of about 1,600 crore in 2011-12. Star India’s revenue is estimated to grow by 800-900 crore after it acquires complete control of the entity.

For the period between 6 May and 2 June, Ten Sports led the sports genre in India with a 55.7% channel share, followed by Star Cricket (18.2%), Ten Cricket (7.0%), Neo Cricket (4.7%), ESPN (4.2%) and Star Sports (4.1%), according to TAM Media Research.

The channel shares varied depending on the sporting events being telecast.

ESPN Star Sports was formed in 1996, and over the years it acquired the rights to some key sports properties including the London 2012 Olympic Games and ICC World Cups and matches until 2015.

The broadcaster also holds the television rights to the Champions League Twenty20 tournament until 2017. The fixture, though, hasn’t been as popular as expected.

Media experts estimate that 90% of ESPN Star Sport’s revenue comes from cricket, while the English Premier League and Formula 1 contribute around $1 million each every year. Wimbeldon earns the broadcaster less than $1 million a year.

As a precursor to the splitting of the joint venture, Star India in April won the broadcasting, Internet and mobile rights for six years for all international cricket played in the country for 3,851 crore.

It will pay nearly 40 crore per game for the 96 matches to be played in India starting July. The payout per match for Star is higher than the 31.5 crore that broadcasting company Nimbus Communications Ltd was paying before BCCI cancelled the deal last year, citing defaults on payments.

On Monday, ESPN Star Sports said it had renewed a seven-year broadcast partnership with The England and Wales Cricket Board for exclusive multi-platform rights to broadcast its domestic and home international tournaments from 2013 to 2019.

aminah.sheikh@livemint.com

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Published: 06 Jun 2012, 10:49 PM IST
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