"We have no plans of investing in RITV": STAR India

STAR denied a report carried yesterday by a leading English business daily and by several net sites saying that STAR India has decided to pick up 30 per cent stake in Reminiscent India Television (RITV). Speaking exclusively to agencyfaqs!, Yash Khanna, STAR's official spokesperson in India, said, "I would like to put it on record that there is no truth in the report. We have not done any such thing, and neither are we in talks for any such deal."

STAR, said the report, was picking up the 30 per cent stake in RITV as part of its strategy to expand into the fast-growing regional language network. For the record, the regional network of RITV operates the Punjabi language entertainment channel Lashkara and the Gujarati Gurjari channel. RITV also has the Anjuman channel in Urdu, the Bangla channel in Bengali, and CCITV, a Tamil language channel catering to the Tamil speaking population in India and abroad. The network also has the Asia One channel, based in the UK, and a music channel, Raag. Entrepreneurs M Suneel and Subhash Menon, supported by Bakul Bhagde and Virajita Suneel started the company in April 1999.

RITV, according to the reports, is valued at around Rs 54 crore, and, therefore, the 30 per cent equity - that STAR supposedly is to pick up - will work out to a funds infusion in the region of Rs 20 crore.

Giving his views on how the report could have originated, a senior media professional said two disparate pieces of information were put together to arrive at this ‘conclusion'. One, RITV had appointed Ernst & Young (E&Y) last year to value its television software, brands, distribution and business proposition for three years. The idea then was to offload 20 per cent equity stake through private placement. The E&Y report, it seems, was submitted last week, post which the regional channel network gave E&Y the mandate of finding itself ‘a suitable buyer'.

Two, says the media professional, STAR honcho Peter Mukerjea has made it amply clear during various meetings with media folk that STAR would prefer to buy a popular but weak regional channel to gain a foothold in a particular regional language market rather than launching a full-fledged channel on its own. "The buyout of Vijay TV was one step in this direction," he said. "And RITV, with its current state of financial health, seems to fit the bill of the next potential take-over target," said a Delhi-based media observer. A STAR insider added it is popular knowledge that STAR gets "regular feelers from such candidates looking to stay afloat by hook or by crook".

Interestingly, in January this year, in conversation with a leading English daily based in Delhi, RITV promoter M Suneel has said that he was planning to offload about 30 per cent equity to a financial investor in a bid to fund further expansion. He had indicated then that besides launching a new channel in India, the company was also planning to launch a pay service in the Middle East and North African markets by March-end. RITV managing director Subhash Menon had said, "We are interested in an investor who understands the media business." He however, had not mentioned having initiated talks with any interested buyer.

According to industry sources, speculation that STAR was looking at RITV for a possible alliance emerged after rival Zee Network picked up a stake in etc in February this year. Analysts say that the alliance of a major channel with one of the regional channels allows it to make "readymade" inroads into viewership, a process that otherwise takes years, and means enormous time and investment. Indeed, Zee Telefilms' buying into etc Networks gave Zee direct access to the Punjabi Diaspora and market leadership in the Hindi music segment.

While a similar tie-up makes ample sense for STAR, it is pretty certain RITV is not going to be its official partner - at least not in the foreseeable future. © 2002 agencyfaqs!