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Nimbus-STAR India deal called off

13-June-2007
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Nimbus-STAR India deal called off

The STAR India-Nimbus distribution deal, which was called off since it created problems for Neo Sports, has now turned into a court feud. Nimbus has moved the court in Singapore seeking damages of Rs 1,200 crore from STAR India.

Shashi Kalathil, CEO, Neo Sports, said, “We have withdrawn our appointment of STAR India as distributors. STAR shall no longer be distributing the Neo Sports and Neo Sports Plus bouquet. Termination of such contracts has various complications. We will take a decision soon on what needs to be done further.”

The deal between Nimbus and STAR India was under strain for several months as the latter decided to revisit the minimum guarantee amount agreed upon by both the parties. Apparently, STAR, which inked a Rs 1,000-crore four-year deal with Nimbus, was looking at reducing the guarantee amount by Rs 400-450 crore. This was due to various factors, a crucial one being the government bill that made it mandatory for private broadcasters to share feed of cricket matches with Doordarshan.

Secondly, when the contract was inked, Nimbus had priced both its channels -- Neo Sports and Neo Sports Plus -- at Rs 57.50, which was brought down to Rs 37.25 by the Telecom Regulatory Authority of India (TRAI).

The cable operators were refusing to carry the Nimbus channel’s bouquet or pay for it, thus giving STAR India no real advantage in terms of ramping up its distribution revenue. When the deal was struck, none of the above factors were taken into account as the bouquet price had not been introduced and the exclusivity issue was also relevant then. STAR India garners close to Rs 360-400 crore annually through distribution revenue, and the contract with Nimbus is far too marginal an increase to support the minimum guarantee of the contract.

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