Rupert Murdoch’s News Corp to buy ESPN’s 50% stake in ESPN STAR Sports

07 Jun,2012

By A Correspondent

 

Rupert Murdoch’s News Corp has agreed to acquire the 50 per cent it does not own in its Asian sports TV joint venture, ESPN STAR Sports, bringing to an end a 16-year-old relationship which, among other things, dominates cricket broadcast in the sub-continent.

 

A unit of News Corporation will buy ESPN’s 50 per cent equity interest, a statement from the two partners said.  The transaction, which is subject to customary regulatory approvals, will allow News Corporation unit to own and operate all ESS businesses, including STAR Sports, ESPN and STAR Cricket.

 

ESPN STAR Sports, which generates about Rs2,500 crore in revenues, also owns television broadcast rights for the ICC World Cup Cricket and T20 Champions League.

 

No financial terms were disclosed but people close to the transaction said that it could have cash and non-cash components.

 

While the cash component would not be very substantial, the non-cash portion could involve handing over the non-India distribution rights of possibly the T20 Championship League rights to ESPN.

 

“News Corporation’s acquisition of the interest of ESS that we did not already own continues the programme of simplifying our operating model, consolidating our affiliate ownership structures, and furthers our commitment to delivering incredible sports programming to consumers across the globe, and particularly enhancing our position in sports programming in emerging markets,” said James Murdoch, deputy chief operating officer and chairman & CEO International, News Corporation.

 

Wednesday’s announcement comes just weeks after STAR broke up with long-time Indian partner, the Kolkata-based ABP Group and sold its stake in Hindi news and regional language channels.

 

“After 16 years jointly managing ESS, we have decided to independently pursue future opportunities in Asia,” said John Skipper, president of ESPN and co-chairman, Disney Media Networks.

 

The partners also announced that Manu Sawhney, managing director of ESS, who has led ESS in the past 16 years, will hand over charge to Peter Hutton, SVP of sports for Fox International Channels (FIC).

Mr Hutton will report to the ESS Board. Mr Sawhney will be staying with the company until August 31 to work with Hutton on a smooth transition.

 

STAR’s ambitions in the sports broadcasting space were evident when it acquired the rights to Indian cricket from the Board of Control for Cricket in India, beating rival Sony and paying Rs4,000 crore.

 

Speakingfrom the US, STAR India CEO Uday Shankar said: “Till the regulatory framework is done, it will be business as usual. As for the money we spent on acquiring the Indian cricket rights, it is money which will be paid over several years, (six) and I am confident of a broadcast transformation and a bigger market. A lot of distortion in this space will also have sorted out.”

 

Mr Shankar also clarified that all the ESPN employees would continue not only as of now, but post the regulatory framework. “It’s not as if STAR has a ready-made sports setup all ready,” he added. As for competition and raising prices for acquisitions, he said, there are four active players and all will compete very vigorously.

 

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

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