Date:21/01/2004 URL: http://www.thehindubusinessline.com/2004/01/21/stories/2004012102650100.htm

Back Tatas enter direct-to-home TV with Star

Our Bureau

Mumbai , Jan. 20

THE Tata group on Tuesday formally announced its foray into the direct to home (DTH) television space.

According to an official statement, the group holding company, Tata Sons, will hold 80 per cent equity in a joint venture with the Star Group for launching a DTH platform in the country. The venture is subject to requisite Government approvals.

"The Tata group and the Star group look forward to building India's largest digital television platform and offering a range of channels, including exclusive channels with interactive features and services,'' the statement said.

No financial details, including investment size, were available. "We are not disclosing those figures now,'' a spokesperson for Tata Sons said.

The joint venture, under discussion for some time, was finally signed today. The spokesperson for Star India also declined comment on the subject.

Indication, however, is of sizable investment.

News reports last year that cited a likely 80 per cent equity stake for the Tatas had pegged the DTH project cost at $250-300 million and modelled on the lines of News Corp's successful BskyB pay-per-view platform in the UK. It was also speculated that the initial bouquet would be 100 channels-strong and the paid-up capital could be roughly Rs 800 crore. At a later stage, the majority shareholder may divest its holding partly to accommodate foreign financial institutions.

It was also projected that pricing may be aggressive at start to gain market penetration.

This is a second coming for Star in DTH, its earlier attempt - Space TV - running into controversy. As per current guidelines, the FDI in a DTH venture is limited to 20 per cent with the total foreign investment (including FIIs, NRIs, OCBs) capped at 49 per cent. In contrast, Space TV's shareholders and directors were employees of Star India, raising several questions.

Subsequent reports had said, Star was interested in restructuring its DTH venture.

ASC Enterprises, from the Subhash Chandra promoted-Essel Group to which Zee TV belongs, has a DTH platform up and running since October 2, 2003. It offers 48 channels plus 10 movie channels. The cost to customer under current introductory offer is Rs 3,999 - covering the dish antenna and set-top box - and a monthly rental thereafter of Rs 100 plus taxes.

Essel Group officials said, the ASC platform has found close to 60,000 subscribers, a sizable portion of them in rural areas. The potential for DTH in India is considered to be very attractive, of eight crore television sets at present just 4.5 crore being connected to cable. Further, cultural diversity is also hoped to leave its imprint on the way in which DTH evolves here.