Star to go solo in sports, buy ESPN from JV

04 May,2012

By Nandini Raghavendra & Ratna Bhushan


Broadcast major Star Group’s 16-year-old equal joint venture with sports broadcaster ESPN is being dissolved with Star buying out ESPN’s stake in the JV, three people familiar with the development said.


Once the transaction is complete, Rupert Murdoch-owned Star will become the owner of ESPN’s India business, the people said. Two of them said the companies were finalising details of the deal and an announcement was likely to be made shortly. They declined to disclose details.


ESPN Software India, which operates ESPN Star Sports’ India operations, generates revenues of about Rs2,500 crore through channels that include Star Sports, ESPN and Star Cricket. ESPN Star Sports owns television broadcast rights for the ICC World Cup Cricket and T20 Champions League.


ESPN’s Singapore office said they did not comment on speculation. A spokesperson for ESS said, “We do not comment on speculations and rumours. ESPN Star Sports continues to run the business as usual. Two partner companies frequently discuss business plans and both the companies, ESPN and News Corp, are proud of the success ESS has made since its inception, and the relationship it shares with fans and business partners. They extend complete assurance for delivering value to our partners as committed by ESS.”


Star India Chief Executive Officer Uday Shankar did not respond to an email and text messages sent to his mobile.


“Star wants a bigger play in the sports broadcasting space,” one of the people quoted earlier said.


“Star’s recent Rs4,000-crore acquisition of the rights to Indian cricket from the Board of Control for Cricket in India, beating rival Sony, are indications of its ambitions in this space,” one of the people quoted earlier said.


It is not yet clear how many of the 200 employees of ESPN, who work for the joint venture, would be retained by Star. An ESPN official, requesting not to be quoted, said employees were uncertain about their future after the deal.


A deal between the two companies could potentially be a complex one as they have a bouquet of advertising deals and cross-sponsorships. But senior executives at two leading media-buying companies, who deal closely with both broadcasting networks, said they did not foresee any impact on advertising deals and sponsorships.


ESPN, Star Sports and Star Cricket either sell airtime and sponsorship inventory independently or as bulk package deals, they said. An analyst from one of the big four audit firms said the battle for the rights to various cricket events will now be fought out between Star and Sony, with the latter holding the rights for Indian Premier League, the 20-overs cricket tournament. ESPN Star Sports was formed as a 50:50 JV between two of the world’s leading cable and satellite broadcasters – Walt Disney, the owner of ESPN, and Rupert Murdoch’s News Corporation – in 1996 for Asia.


It has offices in China, Hong Kong, India, Malaysia, Taiwan and Singapore, and employs more than 650 employees across the region. Star is fast changing gears in India. In the past two months, the broadcaster has launched its second Hindi movie channel under its new brand ‘OK’, called Movies OK. It recently exited its television news business and dissolved its JV with the ABP Group. It also purchased the broadcast rights to Indian cricket for around Rs4,000 crore.


Star seems confident of making money from its cricketing ventures. Speaking to reporters a few days ago, Mr Shankar said the deal for cricket rights would not affect the JV with ESPN. However, the market has been abuzz with the latter’s exit. “Many permutations and combinations of the deal have been worked out, which has taken this long, but ESPN is now fully exiting,” said an official from a firm with knowledge of the deal.


Source: The Economic Times
Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved


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