FTV, Modi Ent resolve decade-old legal dispute

Written by Indu Bhan | Indu Bhan | Ashish Sinha | New Delhi | Updated: Oct 23 2012, 09:20am hrs
In a move that ends nearly a decade-long legal battle between Fashion TV BVI, FTV India and Modi Entertainment Networks (MEN), all parties involved have decided to work together under a new 15-year MoU whereby FTV will be free to assign or sell its rights to any third party.

In return, FTV will have to pay a licence fee of $2 million or 22.5% of the total deal value, whichever is higher, to MEN. Both parties will also withdraw all pending cases filed against each other within a month.

Further, this amount of $2 million would be reviewed for upward revision at the end of the every third year. However, (the amount) will not increase by more than 20% every three years," said the new MoU filed as part of the joint petition before Supreme Court.

While FTV BVI will inform FTV India about any serious discussions and negotiations with any third party, it will be the sole discretion of FTV BVI to enter into any agreement with a third party. Even FTV is authorised by the NRI firm to collect all its dues from the market with active support from the latter and the money so collected from franchisees would be shared on 50:50 basis, the new MoU said.

Besides, FTV India businesses will work on topline revenue shares across all revenue verticals, while FTV India will get 22.5% of all gross revenue that FTV business makes in India. All expenses incurred to run the business in India will be undertaken by the foreign entity, including any advertising and distribution sales costs, the joint petition said, adding that either of the two will not directly or indirectly compete with the services offered by FTV BVI.

MEN is a joint venture between Lalit K Modi and Walt Disney. The matter relates to a decision in 2010 by Fashion Television BVI, the global broadcaster of FTV, to terminate its contract with the Indian partner Fashion Television India following differences over sharing revenue and outstanding payments. FTV India is the licensee of FTV BVI via MEN.

In their decade-long legal battle, FTV had alleged that MEN had been entering into agreements selling the Fashion Bars concept to third parties and collecting advance payment. It alleged that MEN should have sought written permission to engage Fashion TV in long-term partnerships or franchising agreements.

FTV and its Indian partner had entered into a five-year contract in August 2001 for exclusive distribution of the channel in the Territory (that is, India, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka and Maldives). But within two years, the global broadcaster in 2003 alleged breach of contract by the Indian partner and threatened to terminate the contract and de-encrypt the signals of the worlds first channel dedicated to fashion, beauty and style.

Soon, FTV India went free-to-air, triggering the dispute between the two sides over revenue sharing and outstanding payments. Due to this, the cable operators discontinued paying the channel charges of FTV and also refused to clear the outstanding dues of the Indian company, thereby causing heavy losses, the petition filed by FTV India had stated.