Star India, Balaji Telefilms join hands for Telugu channel

SONALI KRISHNA TIMES NEWS NETWORK[ TUESDAY, MARCH 13, 2007 01:24:42 AM]

MUMBAI: Star India, in its second attempt to enter the southern market, is joining hands with the content major Balaji Telefilms to float a separate company for a Telugu language channel. People close to the development said that the new venture will be a 50:50 JV between STAR and Balaji Telefilms, and the two partners will invest Rs 100-150 crore. “All the paper work is currently being processed, and the deal has been given the nod by STAR Hong Kong. The announcement is likely to take place in the next two weeks,” a source said.

The decision to partner with Balaji comes from the fact that the south poses large entry barriers for any newcomer thanks to Kalanithi Maran’s Sun Network’s monopolistic position both on the content and distribution side.

Also Balaji Telefilms, in which STAR already holds 26%, has been producing Telugu, Kannada, Malyalam and Tamil software for close to eight years now, and are currently exclusive vendors for the Sun.

As a practice, Sun TV has inked exclusive contracts with all the major content providers down south, disallowing the production houses to supply to any other broadcaster.

STAR will now get a secure content provider, while for Balaji it would mean assured revenue down south. But the Jeetendra-promoted company, which has been struggling for a while now to get on to Sun’s prime time, will have to totally get off the Sun Network. Both STAR and Balaji Telefilms refused to comment on the issue.

STAR’s entry into the other regional markets will give the media house a substantial regional presence, apart from growing its viewer base. This will also allow it to bundle advertising packages on a higher premium and command better subscription rates.

However, the going may not be so easy, as the distribution landscape down south is also largely controlled by Sun’s cable arm Sumangali Cable Vision (SCV). The upside, however, is that the Telugu market is not so cluttered with the cable industry largely fragmented. The good news for STAR is that Hathway, in which STAR already holds 26% is a significant player and this would help STAR leverage its presence.

Courtesy: Economic Times