STAR Picks Up Majority Stake In Asianet; Chandrasekhar Eyes News Channel, Newspaper Buys

News Corp owned STAR TV is forming a joint venture with Rajeev Chandrasekhars Jupiter Entertainment Ventures - STAR Jupiter Entertainment Television. STAR Jupiter will be a majority shareholder in Asiannet communications, reports News Corp owned Dow Jones Newswire. STAR will hold at least 51 percent in the venture, and STAR CEO Uday Shankar has told Indiantelevision.com that the news business will not be a part of the portfolio, since only 26% FDI is allowed in the News business. Murdoch wants to enter the news business - but is now interested only in businesses where News Corp will be a majority stakeholder. Asianet has been restructured into four companies - general entertainment, news, radio and media infrastructure, and it appears that STAR Jupiter will be involved only with the General Entertainment business to begin with.

The STAR-Jupiter deal had been reported by the Economic Times in August, around the time when Rupert Murdoch had visited India. One sensed that the deal had been done, when it was reported a few days ago that Asianet was looking to buy an English news channel, and a vernacular paper. During his visit to India, Murdoch had expressed an interest in the regional television space in India, saying that STAR will invest $100 million, and set up 6 channels.

STAR JV With Korean Co Gets FIPB Approval For Shopping Channel

STAR CJ Network India, a joint venture between Star India and South Korean company CJ Home Shopping, has received an FIPB approval for setting up a home shopping channel in India. The approval allows the joint venture to invest up to 100 percent foreign investment in the channel. Media reports had suggested that the JV is looking to invest around $2 Million, and is probably going to be launched in early 2009.

The channel will compete with HomeShop18, the venture from Network18 which has both a TV and an online presence. In July this year, Homeshop18 had raised Rs. 90 crores in a second round of funding from its investors SAIF Partners (Rs. 68.3 crores) and Capital18 (Rs. 21.3 crores).

What attracts STAR to this genre? Well, for one thing - the growth. Going through Network18s financial results, I noticed that Homeshop18 has doubled its revenues since Q1 - they reported a quarter-on-quarter increase in operating revenues of 64%, at Rs. 5.03 crores for Q209, up from Rs. 2.46 crores for Q109, and an increase in orders of almost 50 percent. So how big is the market for sauna belts in India? Not that Network18 is doing well, though - the company has reported net losses for the last many quarters - this time, of Rs. 16.77 crores.

Disclosure: I own an inconsequential number of shares of Network18

@MoMo Mumbai: Things To Do, Short Codes, Safe Harbor, Bikini Content

What Needs To Be Done
– Single Point Access: Arvind Rao, CEO of OnMobile emphasised the need for a single point window for short codes, so that the short code is operational within 30 days on all operators; a central point for getting connectivity and access for off-deck services
– A central independent auditor for content downloads
– It’s important to get the DOT to remove the 15 percent tax on mobile VAS; it will kill the micro-payments sector

Short Code Issues
Both Rao and Viren Popli, SVP & Head of Mobile Entertainment for STAR, mentioned the issues around short codes - it used to take 2 years to get a short code from BSNL at one point in time. Popli said that even when a short code is given, one still does not get connectivity - having to fly around the country (with different circle heads, I presume)- it just adds tremendous cost to a startup. Imagine what will happen when you have to deal with 20 mobile operators.

Content Issues

Quality Of Service: Popli said that those who are providing branded services are very cognizant of the quality of service. “We have a very strong third party audit for every large show - KMPG, Deloitte etc. We have published rules and regulations. If there’s a failure on the network side, we are not liable.” For the show Paanchvi Pass, they set up a call center for complaints and…”we record each and every call - in one of our data vaults we have every call we’ve recorded for KBC 1 - so we can pull it out and say that at so and so time, and so and so date, this is what you said. That’s something that we as an organization do invest in.”

On Liability, Exclusive Deals, Lottery and Bikinis, Telcos and Marketing -

(more…)

@ MoMo Mumbai: “Don’t Compare The US Market For VAS To The Indian Market”, Says Viren Popli, SVP & Head (Mobile Ent), STAR India

“Don’t compare the US Market (for Mobile VAS) to the Indian Market,” said Viren Popli, SVP & Head of Mobile  Entertainment For STAR India, responding to a question at Mobile Monday Mumbai (MoMo Mumbai). “The US market is built on a $3 ringtone, while the Indian market is built on a Rs. 7 ringtone. When you are told in the US that you’ve got a 100,000 ringtone downloads, you are paid for a 100,000 ringtone downloads after 1 month. In India, if you have 700,000 ringtone downloads, you’re told you’ve got 100,000, and you get paid for 30,000, one year after its done.”

Popli rubbished claims of India being a competitive market, saying that while in the US, there are only 3 mobile operators, the revenue shares are much higher, despite their being at least three times as many mobile operators in India. A rather shocking revelation - “If you have ever dealt with mobile operator, you will know that after your meeting ends with one operator, every mobile operator knows what you’re talking about.” I don’t know about you, but the word CARTEL comes to mind. No wonder some VAS players are pushing for standardization and transparency in this space.

So is the solution in going off-deck and allowing advertising to pay for the content? Says Popli: “In telecom, operators have actively discouraged free content. If you put your content up for free - the amount of money I make off advertising on a per-click basis, is equal to the money I make the revenue share I get out of a Rs. 3 SMS. It is actually encouraging me to destroy existing business models. So if a big media company suddenly decides that it’s easier to give the content away for free, because it is easier to collect Rs. 1 lakh from an advertiser than revenue share from an operator, the whole game starts changing.” I think that argument is valid only if you have a fill rate of 100 percent for advertising.

The other issue here is - while a big media company with its marketing muscle has this option, smaller content owners do not. Hence, the opportunity for a large content aggregator, to do what a big media company is doing.

The Mobile Monday held in Mumbai a couple of days ago, was rather charged up; Veer Bothra and Aditya Mishra were kind enough to allow me to participate virtually, via mobile from Delhi. Am impressed that Veer’s phones battery lasted for over the two hours that I was on the line.

Murdoch India Trip: FDI Limit; DJ Index, $100 Million In TV; AsiaNet, Balaji, Sakaal

A senior American journalist once said to me - “Mr. Murdoch owns everything, or tries to”. Media Mogul Rupert Murdoch, CMD of the all powerful News Corp was in India recently, and his meetings and possible investments have been the buzz about town.

Apart from the possible investments and the launches - we’ll get into that later - his most important meeting was with Prime Minister Manmohan Singh, and Congress Chairperson Sonia Gandhi. It is believed that Murdoch asked for an increase in FDI in media to 49 percent, and the implications of that go far beyond the other announcements. It is because the FDI limit in News Nedia is limited to 26 percent that News Corp wont invest in the Print Media space in India, or bring the Wall Street Journal to this country - “We don’t see ourselves taking a stake in print – because it is not available and because we won’t want to take just a 26 per cent stake,” he said. Keep in mind that STAR has a minority stake in STAR News for this very reason. Also, do take a look at this exchange4media story on FDI.

The other interesting aspect of Murdoch’s visit was his interest in the regional media space - he announced that News Corp will be investing $100 million in the regional TV space, in setting up 6 TV channels. Following that, there was a report in the Economic Times that News Corp might pick up a majority stake in regional player Asianet Entertainment, controlled by Rajeev Chandrashekhars Jupiter Capital. Asianet is apparently valued at Rs. 300 crore, and do note that Asianet has been restructured into four companies - general entertainment, news, radio and media infrastructure; that will allow a company to invest differently in each segment, again, due to FDI constraints.

Now Murdoch may have said that he’s not interested in the Print Media space, but it has been confirmed that he met Abhijeet Pawar, nephew of politician Sharad Pawar, and the MD of the Sakaal group of newspapers. Sakaal has a Marathi daily newspaper, recently launched an English daily Sakaal Times, and is planning to launch a Marathi TV channel Saam TV. So don’t be surprised if there’s News Corp money coming Sakaal’s way.

Meanwhile, it appears there is a split in the offing too - Mint reports that Balaji Telefilms will be buying back its 25.99 percent stake from Asian Broadcasting FZ-Llc, a Dubai based STAR affiliate. STAR has paid Rs. 123 crore for this stake, and Balaji is in talks with investors for the same, thus taking on News Corp in the regional space.

The least interesting part of Murdoch’s India trip - the launch of the Dow Jones India Titans Index

TRAI Open House Discussion On Mobile VAS - Off-Deck vs On Deck, Licensing, Interconnection , Dispute Resolution and Revenue Share Threshholds

The gloves came off at the TRAI Open House discussion on regulating Mobile VAS, and despite the sedate start, VAS companies and mobile operators were clearly at loggerheads with each other. Some important points made:

1. No Network Neutrality of Indian Mobile Networks: Telecom operators block access to services and sites, and there is no unregulated access. The telecom operator decides, instead of being “just a pipe”. Microsoft questioned the neutrality of the operator networks, saying that just like the ISPs don’t block sites unless specified by CERT-IN, Microsoft believes that mobile operators should not block access.

2. Impact on different sets of VAS companies -
– On Deck: are VAS companies that provide white labeled vendor services to the carrier/telecom operator - using his infrastructure, branding and promotions. These include the likes of OnMobile Global, Bharti Telesoft, Cellebrum, One97, ValueFirst and others.
– Off Deck (or Direct to Consumer): are VAS companies that use carrier infrastructure and billing for their products and services, but the marketing and branding is independent of the mobile operators. For example - Indiatimes’ 58888, Netcore’s MyToday, Webaroo’s SMS GupShup, Dada Mobile’s in.dada.dj.

Mobile Operators and their representative bodies - the COAI, AUSPI and others mentioned repeatedly that the issue of VAS is an internal agreement with a vendor, and TRAI should not get involved in commercial agreements or negotiations. Reliance Communications dismissed it as well, saying that “Negotiation is our right”. However, the IAMAI and Atanu Mandal (President, ACL Wireless), said that On-Deck and Off-deck services should be looked at differently. On Deck services form a vendor agreement, but Off Deck has the has the branding of the service provider.

3. Need for an Interconnect agreement and transparent costing: Ajay Vaishnavi, Director Telecom for Times Internet (58888) said that there needs to be transparency for an interconnect agreement between offdeck VAS companies and the service providers. Operators should define a fixed cost - Every operator prices the same service differently to the consumer, so this confuses the consumer. The costing should be transparent. (ed: I think he was also hinting at cumbersome negotiations for interconnect agreements).

4. Need for Dispute Resolution Guidelines: Rajesh Jain, MD of Netcore (MyToday) called for clear guidelines and a mechanism for settling disputes, saying that there is only a perception of a fairplay environment (which operators kept hinting at). Netcore’s MyToday services were curtailed for no apparent reason, and there was no way of dispute resolution then. AUSPI (CDMA Operators) responded, saying that the high courts are there for dispute settlements. Airtel said that when they sign an agreement, everything is clear regarding litigation. An operator is like a Big Bazaar (Shopping Centre). The responsibility for the product lies with the content owner.

On Short Code Services, VAS Infrastructure setup, Licensing, the Core Issue and possible solutions - (more…)