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Nimbus-Star distribution deal in jeopardy

21-February-2007
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Nimbus-Star distribution deal in jeopardy

The Star group has reviewed its distribution deal with Nimbus following the recent broadcast Ordinance that made it mandatory for private broadcasters to share live-feed of sporting events of national importance with the pubcaster. The clause deprives Neo Sports of all exclusivity of content, making it very difficult for Star to increase its revenue from distribution business.

While Star refused to comment on the development, when contacted Nimbus Communications Managing Director Harish Thawani said, "Neo Sports and Star have a long-term binding contract and both parties have the highest level of ethics and commitment to ensure a long and successful relationship. We’ll be talking to Star group and renew the contract depending on the outcome of the talks.” Thawani further pointed out that when the contract was signed, none of the above factors were taken into account as the bouquet price was not introduced then and the exclusivity clause was also not present.”

Nimbus and Star are facing two major problems apart from the government’s force-feed diktat. The initial pricing of the Neo Sports bouquet, which was Rs 58.50, was slashed to Rs 37.25 after the TRAI in its January 11 order directed the broadcaster to reduce its bouquet price in non-CAS areas and to price the channels at Rs 5 in CAS areas.

Star India had only witnessed a 10-15 percent increase in distribution revenue, not justifying the minimum guarantee of Rs 600-700 crore that it agreed to pay to Nimbus over a four-year period until 2010.

Star is the exclusive distributor of the Neo channels in the country and the contract is valid till 2010. Being new channels, Neo Sports and Neo Sports Plus are banking on Star’s distribution platform for a national reach.

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