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Changes in STAR-Balaji relations seen as a win-win development

Changes in STAR-Balaji relations seen as a win-win development

Author | exchange4media Mumbai Bureau | Wednesday, Aug 20,2008 8:28 AM

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Changes in STAR-Balaji relations seen as a win-win development

There is a twist in the tale of the STAR Group and Balaji Telefilms’ relationship. The special bonds between the two have been severed. Consequently, STAR Group is selling back the 25.99 per cent share that it had in Balaji Telefilms to Balaji. The 51:49 per cent joint venture that the two had created for south regional channels has been dissolved. Also, the exclusivity clause that STAR India had with Balaji, wherein the latter couldn’t create any shows on other channels in time slots where it had a show for Star Plus or even if it created for Star One, is also relinquished.

The thought process, as the parties have put it, is to let both organisations take advantage of the opportunities in the market today, and keep their relation healthy. However, with this termination of agreements, much would be changing, and many are of the opinion that the development means good news for the two companies and for the Indian industry on the whole.

The win-win no deal

STAR Group had bought the stake in Balaji through its subsidiary Asian Broadcasting in August 2004 for about Rs 9 per share, and is now selling it back for an aggregate price of Rs 190 per share.

Then in 2004-05, STAR Group had entered into an exclusivity deal with Balaji. The consequence is that today when Balaji has a show at Sony (‘Kuchh Is Tara’), 9X (‘Kahaani Hamaaray Mahabharat Ki’) and Zee TV (‘Kasamh Se’) at 9.00 pm, competing with itself, it has no show on any other channel in the time slot that it has a show on Star Plus. This clause is now revoked. STAR India has been paying a premium to Balaji for the past years to keep the exclusivity agreement on.

The existing shows on Star Plus would see the same commercial arrangement. Uday Shankar, CEO, STAR India explained, “Obviously, if Balaji was prevented from programming for other broadcasters, there is a denial of opportunity that comes there, and we had to pay the opportunity cost for that. Going forward, the present arrangement would continue, but it is very open now. That is to say, how long these shows go on would depend on the performance of the shows, and some might be replaced.” Star Plus is believed to make at least one announcement soon.

A leading broadcaster explained, “One reason why many channels couldn’t have worked with Balaji was because the primetime was blocked with the Star exclusivity deal. This really opens the game some more now. Balaji is a strong content provider and they are a strong bet for many new broadcasters.”

STAR not waiting for a JV to enter South market

In April 2007, STAR and Balaji had formed a joint venture to create a network of regional language general entertainment channels targeted at the South India market. The JV is terminated, and for now, STAR India has decided not to wait for a partner to proceed for its plans in this market.

“We want to push aggressively in the regional market. The overall company philosophy is that in our core competency of broadcasting, we wouldn’t partner with anyone unless they bring such expertise on the table that we cannot replicate. At present, we are already proceeding with our plans on the South market by ourselves in the absence of a suitable partner. We are speaking to people and if something worthwhile materialises, we would take it. But that has not happened yet.”

Shobha Kapoor, Managing Director, Balaji Telefilms observed, “STAR and Balaji have enjoyed a successful relationship over the past few years, one that has been of mutual benefit to both. We are keen to continue this relationship in the best spirit going forward. This agreement releases Balaji from its various obligations and opens up very exciting opportunities for it.”

From both the organisation’s point of view, the ending of the various deals have freed the companies to try newer things. From an industry point of view, the move has opened many new opportunities for organisations to partner with these companies.

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