Star Sports, ESPN may go separate ways in India after 18 years together

Written by Ashish Sinha | New Delhi | Updated: Feb 28 2012, 10:02am hrs
ESPN Star Sports (ESS), the 18-year-old sports broadcasting joint venture between ESPN International and News Corp, is under review for a possible operational split of its Indian business. The move aims to boost the Indian footprint ESPNs parent Walt Disney and give flexibility to both parties to pursue expansion in Indias booming pay TV market.

Disney, which recently completed the acquisition of Mumbai-based UTV and its several television channels, is keen to expand its Indian footprint. Internationally, Disney controls a majority interest in ESPN Inc. The ESS venture, set up by the overseas arm of ESPN Inc and News Corp in 1994, is Indias leading sports broadcaster. The joint venture also operates 17 channels in the Asia-Pacific region.

According to sources, there are several options before the ESS promoters, including an outright split in the global JV or an operational split in the India business, among others. In an operational split, ESS will need to work out the modality of dividing the subscription and advertising revenues. Talks for a split between the two partners were recently renewed. Division of sports broadcasting rights between ESPN and the Star Sports channels and a model to split

India revenues are being

reviewed, said a source in the sports broadcasting business. Any decision will take several months as there are complex issues which need to be reviewed, sources indicated.

When contacted, an ESS spokesperson said: We do not comment on speculation and rumors. When asked whether a split in the joint venture is expected anytime soon, the company said: ESPN STAR Sports continues to run the business as usual.

Leading consultant PricewaterhouseCoopers too declined to comment, since it audits both ESPN and Disney. However, experts said the two parties have been discussing the matter for some time. Currently, the JV is neither being fully run by Disney nor by Star. Once ownership issues are settled, other things will fall in place, said the head of media and entertainment practice of a leading consultancy firm.

ESS operates in India through ESPN Software India and operates channels including ESPN, Star Sports, Star Cricket and ESPN News. The venture has revenues in excess of R2,500 crore including advertising and subscription revenue. The joint venture owns television rights for key sporting properties like the ICC World Cup cricket, BCCIs T20 Champions League apart from overseas cricket rights from England and Australia, among others.

According to one person, ESPN may retain the ICC cricket rights while the Star bouquet of sports channels may get the T20 Champions League.

According to Mihir Shah, India analyst for Media Partners Asia, such a move will help UTV get a channel driver. The general entertainment channel space is crowded. If ESPN actually comes under the Disney fold, it will become the bouquet driver. It is interesting to note that when MediaPro was formed, the sports broadcasting business of both Star and Zee were kept out. May be this was the reason. A split in the JV has been on cards for some time now, Shah told FE.