According to industry sources, Star has already signed an agreement with RPG Netcom Ltd whereby Star will pay around Rs 52 crore for the 26 per cent share of RPG Netcom. Based on the total valuation of RPG Netcom which is around Rs 200 crore, Star decided to pay Rs 52 crore for a stake in the company, said the market sources.
However, when contacted, Stars senior vice-president Yash Khanna, declined to comment on the deal.
A RPG Netcom official on condition of anonymity, however, said the Rs 6,500-crore RPG group has offloaded a 26 per cent stake in RPG Netcom to Star. For a long time RPG Netcom was planning to invest in the cable network systems to provide broadband connectivity to the cable viewers. Now the money will be used to upgrade the network capability to carry broadband services like Internet, said the official.
Through its association with Hathway Cables, Star has been able to effectively implement its business strategy in Mumbai, Chennai and Bangalore. Now, with the stake in Netcom, Star will be able to push its business plans in Kolkata.
Said a cable industry observer, Look how Star has benefited from its association with RPG. Last year, when Star increased the rates, its channels were off the air for 62 days as RPG Netcom operators refused to broadcast. But when the same thing happened in January, Netcom did not take any step. However, when Zee increased its rates,the RPG Netcom operators switched it off for a month.
Said Mr Khanna, Our association with Hathway has helped us to have direct presence in the western and southern part of the country. This has certainly helped our business to grow.
With a host of telecom operators wiring up the cities, the challenge for the broadcasters is to have a direct relationship with the customers. Both Star and Zee are trying to enter into a pact with the local MSO, either through a equity participation or through a strategic alliance, which will help the braodcasters to swiftly implement their business plans.