Tata, Murdoch In 80:20 DTH JV

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New Delhi, Jan 20: : Rupert Murdoch’s STAR has tied up with Tata Sons for launching its direct-to-home (DTH) broadcasting service. Tatas would have 80 per cent stake, STAR would keep 20 per cent. FE (May 2, 2003) was the first newspaper to report the kick-off in negotiations.

Chief executive officer of the STAR group Michelle Guthrie and chief operating officer Steve Askew were in Mumbai last week, primarily to finalise the DTH deal. Ms Guthrie had taken over as the CEO when James Murdoch was appointed head of News Corp’s DTH operation in the UK, BSkyB. The STAR-Tata application will be submitted to the government soon.

In a news release, Tata Sons said late Tuesday, “the Tata Group would hold 80 per cent in the joint venture entity” and that the JV proposal is subject to requisite government approvals. The release talked about “building India’s largest digital television platform” and offering “exclusive channels with interactive features and services.” It did not specify whether Murd-och’s proprietary architecture would be shared with the Tatas and who the controlling executives of the company will be. The announcement ended Mr Murdoch’s efforts to float a DTH venture here all by himself through equity holding by senior employees in his firm.

STAR and Tata officials were tight-lipped about the financial details of the venture even after the deal was signed. Sources close to the development said the DTH service would be modelled on BSkyB, which is known to have dished out set-top boxes even free of cost in the initial stages. The STAR-Tatas project cost may be around Rs 1,600 crore.

As per government guidelines on DTH, the FDI limit in a venture is 20 per cent and total foreign investment permitted is 49 per cent. There’s a sectoral cap of 20 per cent as well for broadcasters. The guidelines also mention that the applicant company must have Indian management control and that the CEO of the company should be a resident Indian citizen.

Earlier, STAR got into a controversy when it “backed” a company called Space TV with an authorised share capital of Rs 10 crore for DTH. The application was rejected by the government because the majority equity holding was held by Mr Murdoch’s employees.