STAR TV carried out a virtual backdoor takeover of UTV’s Tamil channel, Vijay TV, by taking control of programming, content, distribution and airtime sales. Formally, the channel will continue to be owned by UTV, but all crucial functions have been franchised to STAR.
This will be the 10th channel to be added to STAR’s bouquet. Vijay TV also represents STAR's first foray into the South and into the regional language market. STAR has been looking for a toehold in the Tamil market as it feels it would supplement STAR’s advertising package.
From UTV’s point of view, Vijay TV has been a constant loss-maker and has been bleeding the group. This led UTV chairman Ronnie Screwvala to open talks with STAR to hammer out a viable alternative.
The STAR-UTV arrangement envisages STAR acting as a franchisee to sell and produce the channel, for which it will receive a commission of 15 per cent for all ad revenues generated by the channel.
STAR will also produce programmes for Vijay TV, including regional language versions of popular serials like Saans for which STAR Plus has the rights.
Thus, as a content-provider STAR will also be entitled to a fee. The flip side is that as part of the arrangement, UTV, too, as a content-provider will now have a special contract to sell Hindi entertainment and other programmes to STAR.
UTV will continue to retain control over all broadcasting functions related to uplinking the channel via VSNL’s facility in Chennai. Only Indian companies in which foreign equity does not exceed 20 per cent have been permitted to uplink from India.
In the Tamil market, Vijay TV is poor third after the dominant Sun TV and the No 2 Raj TV. STAR sources said Vijay TV’s main problems related to lack of sufficient investments in programming, promotion and distribution. This the Murdoch-owned network hopes to rectify.