Stars investment plans for RPG were shelved as cable companies would have required to pump in additional investments under the conditional access system (CAS) regime. With the uncertainty over investments, cash flows and margins for MSOs under the CAS regime, Star felt that it would be difficult to decide on acquiring stake in a cable company.
Last year, Star had asked RPG to give an estimate of the funds required to be put in and the cash flow situation post-CAS. This was after Star had done a due diligence on the MSO through Arthur Andersen. The valuation was done internally by Star.
Though Star India chief executive officer Peter Mukerjea did not specifically state that Star was putting off its decision to acquire a stake in RPG, he said any further investment in a cable company would not be necessary if Hathway Cable & Datacom decides to introduce Headend in the Sky (HITS). Star has a 26 per cent stake in Hathway. Under HITS, it may not fit into our strategy to invest in RPG, he said. Hathway will be able to expand into new areas if the MSO decides to implement HITS for cable TV delivery as it would provide a national footprint.
Sources said that Star was calling off its decision to take a stake in RPG as all cable companies would require substantial cash for investment under CAS. The Kolkata-based MSO would not be critical to Stars business plans on the distribution front. With a stake in Hathway, Star has a presence in the cable TV distribution business in the western, southern and northern regions. Stars earlier plan was to have a presence in the eastern region through RPG Netcom.
Commenting on Star News, Mr Mukerjea said that Rajat Sharmas half-hour news programme, Aaj Ki Baat, would move from Star Plus to Star News for three months. It is around that time that Mr Sharmas contract with Star expires. We will have our own production team for news. We will not have slots for independent producers on our news channel, he said.