Alokananda Chakraborty
News

STAR buys out "nearly 100 per cent" of indya.com

The News Corp-owned STAR Group announced in Bangalore that it had bought “almost all” of the horizontal portal indya.com


agencyfaqs!

BANGALORE

Media baron Rupert Murdoch's STAR Network, owned by News Corp, on Thursday said it had acquired "nearly 100 per cent" of Indian consumer Internet portal indya.com. STAR has acquired all the shareholding of founder Pradeep Kar, Microland and other investors, making it the "significant majority" shareholder of indya.com, said indya.com sources. Pradeep Kar of the Microland Group launched the horizontal Internet portal about 16 months ago with a splash, grabbing the entire front-page of The Times of India daily for an advertisement.

Information available with agencyfaqs! indicates that Kar wrote in a letter to his employees on Thursday saying, "I believe that a closer integration with News Corp would be essential given the trying market times. Given this reality, I, along with Microland and other shareholders, have decided that our dream of indya would get realised by relinquishing our shareholding in favour of News Corp/STAR."

Gary Walrath, executive vice-president, STAR Group, will now be the chairman of indya.com. Sunil Lulla will continue to lead indya.com as its chief executive officer, assisted by indya's management team. "The move is the line with STAR's vision of providing next-generation media connectivity in Asia and equips indya.com with an unparalleled competitive edge to be the only Internet-based communications, entertainment and commerce powerhouse. indya.com will now be the online face of STAR in India," a joint statement issues by both the partners said.

STAR had invested $50 million in April last year for a 37 per cent stake in indya.com. With this takeover, STAR has bought over stakes of Microland as well as 20 other investors like ICICI, Chase Private Equity, Indocean, John Scully (former chief of Apple Computer Inc), Vinod Khosla (Indian-born venture capitalist and one of Silicon Valley's most influential figures) etc. Talking exclusively to agencyfaqs! Sunil Rajshekhar, COO, new media & convergence, STAR, said, "It is a complete takeover. We can't call indya.com a 100 per cent subsidiary yet because a small shareholding of some 1 or 2 per cent still remain with one of the shareholders. It will be a 100 per cent subsidiary once the all formalities are taken care of." "And that will happen sooner than later,"added a STAR executive.

A STAR source close to agencyfaqs! said that the announcement had to made in a haste - even before all the formalities are over - because Walrath is due to leave the country in a day's time. Though the group did not disclose the current valuation and the price it paid for buying the indya.com stake, sources hinted that in line with weak market sentiment for dotcom companies, the valuation was "on the lower side". He said, "The valuation of indya by STAR was much lower than what the portal might have expected." Added Rajshekhar, "I would say we made a fair investment to acquire the stake." Which could explain why the negotiations for the buy-out went on for close to three months.

Elaborating on the development, an indya.com executive said, "By virtue of this strategic alignment, indya.com now becomes the online destination for popular programmes on STAR channels. In turn, STAR will provide exciting opportunities to indya.com on its channels thus expanding the convergence space." Some of the STAR channels - including STAR Plus, STAR Movies, STAR World and CHannel (V) - have already been integrated into indya.com, with more to follow in the near future. "This alignment will give consumers and users an opportunity to interact more with STAR on the Internet and see more of indya.com on television," an indya.com source said.

Besides indya.com, STAR also holds stakes, varying between 20 and 33 per cent, in four other Internet ventures, Explocity.com, Bazee.com, eGurukool.com and India Properties. When asked if STAR plans to increase its stake in these companies, Rajshekhar said, "These are strategic, long-term investments and that there are no plans to increase stake," - at least for the time being. What is certain, however, is the fact that indya.com will ‘combine' with Hathway, a cable network in which STAR has a significant, undisclosed stake, "to bring a better mix of entertainment, content distribution, interactive services and e-commerce".

© 2001 agencyfaqs!

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