Star India may buy out minority stakeholders in Asianet3 min read . Updated: 14 Jan 2013, 12:56 AM IST
Parent firm News Corp. has been consolidating its various holdings over the past year or so
Mumbai: Star India Pvt. Ltd, a unit of Rupert Murdoch’s News Corp., is close to buying out minority stakeholders in a venture that controls its South Indian language channels, according to three people with knowledge of the development.
The South Indian channels that Star runs include two Asianet general entertainment channels (GECs) in Malayalam and Star Vijay in Tamil. The acquisition of the remaining stake of about 19% will be made from Rajeev Chandrasekhar and Asianet Communications Ltd’s current managing director K. Madhavan.
News Corp. has been consolidating its various holdings over the past year or so by buying out partners in some joint ventures and selling out in others.
Star initially took a controlling interest in the Asianet channels in 2009 for $235 million in cash and $20 million of debt that it assumed, according to company filings.
“Southern channels are an important piece of Star’s network," said a Star executive and one of the persons cited above. “Having complete control over Asianet will help take decisions to strengthen the broadcaster’s position in the segment."
The Asianet channels include Asianet and Asianet Plus (Malayalam GECs), besides Asianet Suvarna (a Kannada GEC) and Telugu channel Sitara. Last year, Star launched Malayalam film channel Asianet Movies to expand its presence.
Star India’s spokesperson declined to comment. Chandrasekhar and Madhavan didn’t respond to calls and text messages.
The southern channels contribute about 15% of Star India’s overall revenue, including advertising and subscriptions, according to industry estimates.
Star’s southern channels compete with those of Sun TV Network Ltd and Eenadu, among other rivals.
“The Asianet buy has been a profitable proposition for Star. The Malayalam channel Asianet leads the pack and Asianet Plus ranks third in its genre, while Kannada channel Suvarna ranks second," said a second Star India executive, who spoke on condition of anonymity. “Star Vijay ranks second after Sun group’s Tamil channel."
Star India’s move to buy out minority stakeholders in Asianet is in line with the company’s recent strategy of strengthening its hold on various ventures and exiting others, said a media analyst at a leading consultancy firm who didn’t want to be identified.
In June last year, News Corp. bought Walt Disney Co.’s 50% stake in Asian joint venture ESPN Star Sports, turning it into a fully owned unit. Also last year, Star India sold its 26% stake and exited the joint venture with the Anandabazar Patrika group in Media Content and Communications Services India Pvt. Ltd, which ran Star News, now rebranded ABP News, besides entertainment channels Star Ananda (Bengali) and Star Majha (Marathi). Both those channels have been rebranded to reflect ABP ownership.
Star’s Bengali GEC is Star Jalsha and the Marathi GEC is called Star Pravah. Star recently launched Bengali film channel Jalsha Movies.
News Corp. is close to exiting its home shopping joint venture in India, Star CJ Network India Pvt. Ltd, with South Korea’s CJ O Shopping Co. Ltd. The media company is in talks with Providence Equity Partners to sell its 50% stake in the joint venture, Mint reported on 12 December.
Media experts said Star’s move makes sense because there is untapped potential in the regional broadcasting space with regard to advertising revenue that could be realized in the next few years.
Regional advertising grew 15% in 2011, faster than the national market, according to a 2012 media and entertainment report by the Federation of Indian Chambers of Commerce and Industry lobby group and consultancy KPMG.
“Advertisement spends are expected to grow in 2012 at similar levels as experienced in 2011. In the long term, however, India continues to be a growth market, and the advertisement market is expected to grow at a compounded annual growth rate of 15% over 2011-16," the report said.
Before buying the stake in Asianet, Star had formed a 51:49 joint venture with Ekta Kapoor’s television production company Balaji Telefilms Ltd to launch entertainment channels in Telugu, Kannada and Malayalam. Balaji was to produce exclusive content for the regional channels. With this venture getting scrapped, Star bought the stake in Asianet.